Smart Money Supply and Demand Zones with ATR-Based Filtering

Summary

This document explains a price-overlay indicator that marks supply zones at confirmed swing highs and demand zones at confirmed swing lows. Zone thickness scales with average true range, and the midpoint serves as a point of interest. A zone remains active until a candle closes beyond its outer edge; the indicator then removes it and draws a break-of-structure line at the former midpoint. Optional pivot labels and zigzag lines provide additional chart context.

Its main transferable design idea is to prevent clutter by rejecting a new zone when its midpoint lies within a volatility-scaled distance of an existing active zone. The text also highlights implementation details that affect results, including pivot confirmation delay, close-based break tests, and excluding deleted zones from overlap checks. It provides parameter guidance and a platform translation, but no backtest or evidence that the zones predict profitable trades. The indicator identifies levels and structure; it does not specify a complete entry, exit, or risk-management strategy.

Key ideas

• Confirmed swing highs and lows anchor supply and demand zones, respectively.
• Zone thickness and overlap spacing are scaled using average true range.
• A close beyond a zone boundary invalidates the zone and creates a break-of-structure line.
• The overlap filter compares zone midpoints against active zones to limit chart clutter.
• Pivot confirmation introduces a delay, and the indicator alone does not define a complete trading strategy.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.