Short answer
How do you draw a supply and demand zone?
To draw supply and demand zones, find the base between an exciting leg in and leg out, then draw two lines across it. For a demand zone, the proximal line goes at the highest candle body in the base and the distal line at the lowest wick. For a supply zone, use the lowest body and the highest wick.
Price drops into a short base and rallies out. The demand zone spans the base from its highest body to its lowest wick.
Key takeaways
- Every zone is drawn with two lines: the proximal line nearest to current price (entry) and the distal line farthest from it (stop-loss reference).
- Demand zone: proximal at the highest body of the base, distal at the lowest wick of the base.
- Supply zone: proximal at the lowest body of the base, distal at the highest wick of the base.
- Body-to-wick marking keeps the zone narrow; switching to wick-to-wick can double the stop distance and halve the quantity you can buy for the same risk.
- Exceptional marking extends only the distal line to a leg candle's wick; the proximal line never changes.
- Never mark a zone using a running candle; wait for the candle's period to close.
- Label zones by distance from current price — Demand Zone 1 is the nearest — and include the pattern and freshness.
What are the proximal and distal lines of a zone?
Every demand or supply zone is defined by two horizontal lines drawn across its base. The proximal line is the edge nearest to the current market price: when price reaches it, the zone is touched and a planned entry can trigger. The distal line is the far edge: if price closes beyond it, the zone has been overwhelmed and the trade idea is invalid, which is why the stop-loss sits just past it.
| Line | Demand zone | Supply zone | Trading role |
|---|---|---|---|
| Proximal | Highest body of the base | Lowest body of the base | Entry just beyond it |
| Distal | Lowest wick of the base | Highest wick of the base | Stop-loss just beyond it |
Freshness is also judged at the proximal line. The first time a later candle body crosses it into the zone, a body-to-wick zone counts as tested — a wick alone does not — which is why the proximal line has to be drawn precisely.
How do you mark a demand zone step by step?
Mark a demand zone only after you have confirmed a valid structure: an exciting leg in, 1 to 6 base candles and a green exciting leg out. Then look only at the base candles. The highest point reached by any base candle's body becomes the proximal line, and the lowest point reached by any base candle's wick becomes the distal line.
- Draw a horizontal line at the current market price, then look left and down for a green exciting leg-out candle.
- Step back and identify the base candles between the leg in and the leg out. Count them: 1 to 6 is valid.
- Among the base candles, find the highest body top — the higher of open or close. Draw the proximal line there.
- Among the base candles, find the lowest wick tip. Draw the distal line there.
- Shade the area between the lines green and extend it to the right towards current price.
- Check whether any later candle body has entered the zone, or a second leg-out has formed from it. If not, the zone is fresh.
- Label it — for example, Demand Zone 1 (DBR, fresh).
How do you mark a supply zone step by step?
A supply zone is marked as the mirror image of a demand zone. Confirm an exciting leg in, 1 to 6 base candles and a red exciting leg out, then work only with the base. The lowest body bottom in the base becomes the proximal line, and the highest wick tip in the base becomes the distal line. The zone sits above current price.
Price rallies into a short base and drops out. The supply zone spans the base from its lowest body to its highest wick.
- From the current-price line, look left and up for a red exciting leg-out candle.
- Identify and count the base candles before it (1 to 6).
- Find the lowest body bottom in the base — the lower of open or close — and draw the proximal line.
- Find the highest wick tip in the base and draw the distal line.
- Shade the zone red, extend it right, check freshness and label it, for example Supply Zone 1 (RBD, fresh).
Why use body-to-wick instead of wick-to-wick marking?
Body-to-wick marking uses a candle body for the proximal line and a wick for the distal line. Wick-to-wick marking uses wick tips for both, which makes the zone wider. Bodies show where price was actually accepted during each period, while wicks show brief rejected spikes, so pending orders are more likely to cluster near the bodies. A narrower zone also means a closer stop-loss and a larger position for the same rupee risk.
The solid band uses the highest base body as the proximal line. The dashed outline uses the highest base wick, making the zone wider and the stop-loss distance larger.
| Measure | Body-to-wick | Wick-to-wick |
|---|---|---|
| Proximal line | ₹500 | ₹516 |
| Entry / stop-loss | ₹501 / ₹485 | ₹517 / ₹485 |
| Risk per share | ₹16 | ₹32 |
| Quantity for ₹5,000 risk | 312 | 156 |
| Minimum 1:2 target | ₹533 | ₹581 |
What is exceptional marking and when should you use it?
Exceptional marking is an advanced adjustment where the distal line extends beyond the base to the wick of a leg candle. It applies when that wick reaches clearly past the base's extreme, because the wick shows where the winning side stepped in before taking full control. The proximal line never changes, so the entry and the zone's fresh or tested status stay exactly the same; only the stop-loss moves further away.
The leg-out candle's lower wick extends below the base. Normal marking keeps the distal line at the base low; exceptional marking moves only the distal line to the leg-out wick.
| Pattern | Leg used | Proximal line | Distal line moves to |
|---|---|---|---|
| DBR (demand) | Leg out | Unchanged | Lowest wick of the leg-out candle |
| RBR (demand) | Leg out | Unchanged | Lowest wick of the leg-out candle |
| RBD (supply) | Leg in | Unchanged | Highest wick of the leg-in candle |
| DBD (supply) | Leg out | Unchanged | Highest wick of the leg-out candle |
Why should you never mark a zone on a running candle?
A running candle is one whose period has not finished — today's daily candle during market hours, or this week's weekly candle before Friday's close. Its open is fixed, but its high, low and close can still change, so a candle that looks like an exciting leg out at noon can close as a base candle. Drawing a zone on it can give you a structure that does not exist once the candle completes.
- Daily zones: confirm after the day's session closes.
- Weekly zones: confirm after the last trading session of the week.
- Monthly and quarterly zones: confirm after the period ends; a long running candle can change shape repeatedly.
How do you label demand and supply zones on a chart?
Label zones in order of distance from the current market price, because that is the order in which price can reach them. The nearest demand zone below price is Demand Zone 1, the next one down is Demand Zone 2, and the same applies to supply zones above. Adding the pattern, the marking type and the freshness to each label means you can read the plan at a glance.
| Label | Meaning |
|---|---|
| Demand Zone 1 (DBR, fresh) | Nearest demand zone below price, reversal pattern, not yet tested |
| Demand Zone 2 (RBR, exc) | Second demand zone below, continuation, exceptional distal |
| Supply Zone 1 (RBD, fresh) | Nearest supply zone above price, reversal pattern |
Use green for demand and red for supply, and add the timeframe if you mark zones from more than one chart.
How do you draw a demand zone in TradingView?
Most charting platforms, including TradingView, offer the two drawing tools you need: a horizontal line and a rectangle. Use the horizontal line to mark the current price, then draw a rectangle whose top edge sits on the proximal line and bottom edge on the distal line. Hovering over a candle shows its open, high, low and close, which helps you place each edge on the exact body or wick.
- Select the timeframe you trade and make sure the last candle you use has closed.
- Pick the horizontal line tool from the drawing toolbar and place it at the current price.
- Find the base and note the highest body and lowest wick from the candle values.
- Pick the rectangle tool, start at the first base candle and drag to the right, aligning the top with the proximal value and the bottom with the distal value.
- Extend the rectangle to the right, set the fill to green, and add a text label.
- Optionally add a price alert at the proximal line so you are notified when price returns.
What are the common mistakes when drawing supply and demand zones?
Most marking errors widen the zone or move the proximal line, and both quietly damage the trade. A wider zone means a smaller position and a more distant target; a misplaced proximal line changes the entry and can make a fresh zone look tested or the other way round. Run through this list each time you finish drawing a zone.
- Including leg candles in normal marking: only base candles set the lines unless you deliberately apply exceptional marking.
- Using wick-to-wick by default: it can double the stop distance.
- Moving the proximal line in exceptional marking: only the distal line changes.
- Placing the stop exactly on the distal line: put it slightly beyond, but not far beyond, to allow for a sharp wick.
- Marking on a running candle: wait for the close.
- Drawing zones you would never trade: tested zones and bases with 7 or more candles add clutter, not information.
Frequently asked questions
What is the proximal and distal line in a demand zone?
In a demand zone, the proximal line is drawn at the highest body of the base candles and is the edge nearest to the current price, used as the entry trigger. The distal line is drawn at the lowest wick of the base candles and is the far edge, used as the stop-loss reference. The stop-loss goes slightly below the distal line.
Should I mark zones from body to wick or wick to wick?
Body-to-wick is the default in this framework. It uses the base body for the proximal line and the base wick for the distal line, giving a narrower zone and a tighter stop-loss. Wick-to-wick widens the zone, which can double the stop distance and halve your quantity for the same risk. Use it only when you have a specific reason.
Do I include the leg-in and leg-out candles when marking a zone?
Not in normal marking — only the base candles define the proximal and distal lines. The exception is exceptional marking, where a long wick on a leg candle extends beyond the base. Then the distal line moves to that wick: the leg-out wick for DBR, RBR and DBD, and the leg-in wick for RBD. The proximal line never moves.
Can I draw supply and demand zones in TradingView?
Yes. TradingView and most charting platforms have a horizontal line tool and a rectangle tool, which are all you need. Mark the current price with a horizontal line, then draw a rectangle from the base with its top and bottom edges on the proximal and distal values. Extend it to the right and add a label and an alert.
How wide should a demand zone be?
There is no fixed width; it depends on the base candles and the stock's volatility. What matters is whether the distance from entry to stop-loss fits your risk per trade. If your 1% risk limit allows fewer than one share, or the stop is very large relative to typical moves, it is usually better to skip the zone than to stretch your rules.
How StockNotify applies this
StockNotify marks zones the way this lesson draws them by hand: the proximal line at the base candle bodies and the distal line at the furthest wick. Use the StockNotify Zones overlay to check your own marking, then save an alert at the proximal line so StockNotify notifies you on Telegram or email when price returns to the zone.
Educational content only. Nothing here is investment advice or a recommendation to buy or sell any security. Chart diagrams use illustrative prices, not market data. Trading involves risk of loss; verify prices independently and apply your own risk process.