Video: How to Find the BEST Supply Zones (Real DAX Trade Example)
Creator: Mindfully Trading
Original Video: Watch the original video
Difficulty: Intermediate
The Big Idea
A supply zone becomes useful when it connects a prior selling area with current market structure and a practical way to manage risk. Mindfully Trading demonstrates that process on the DAX: identify the area before price returns, set an alert, and evaluate the reaction before entering.
The alert is a reminder to inspect the chart. It is not an instruction to sell automatically. That distinction matters when the market reaches the zone while you are busy or after the original setup has changed.
Start With Structure, Then Refine the Zone
The video begins with the daily chart. A broader advance and a more recent bearish pullback can coexist. A short-term short therefore needs a defined invalidation level rather than an assumption that the entire long-term trend has reversed.
On the 15-minute chart, the creator focuses on the most recent lower high. Remaining below that reference supports the bearish scenario. A break and close above it calls for reassessment. The point is to identify what would contradict the trade before looking for an entry.
Next, look left toward the origin of the downward move. A broad supply area can provide context, while a smaller imbalance near the departure may provide a more precise area to monitor. In the example, the creator examines candle overlap and a three-candle gap around a strong departure.
A gap is a visible price relationship. It does not establish that institutional orders remain there or that the next visit must reverse. Refinement should make the decision clearer without making the zone so narrow that it becomes a hindsight exercise.
Turn the Zone Into an Alert Workflow
- Mark the higher-timeframe context and the intraday lower high that would invalidate the bearish view.
- Identify the supply area near the origin of the move and record why that area matters.
- Place an alert where a return would require attention.
- When alerted, inspect current structure and completed candles. Decide whether the rejection supports the original idea.
- Calculate entry, structural stop, position size, and available reward using the price you can actually trade.
The creator describes a rejection sequence involving an upper wick, hesitation, and a bearish candle. That sequence is contextual evidence, not a universal candle formula. Additional confirmation also has a cost: entering later can reduce the distance to the target and increase the distance to invalidation.
Why a Late Entry Changes the Trade
Consider a hypothetical short at 100 with a stop at 102 and target at 97. The planned reward is 3 against risk of 2, or 1.5R. If the alert is missed and the available entry becomes 99 while the same stop and target remain valid, the trade offers only 2 against risk of 3, or about 0.67R before costs.
The chart can still look bearish while the original trade economics have disappeared. Recalculate rather than copying the earlier target and assuming the same opportunity remains. Passing on a late setup is a valid outcome.
In the source example, the creator uses a stop described as 50 “pips” and a target of 75, producing a planned 1.5R relationship. DAX index points, CFD pip conventions, and monetary value per point vary by instrument and broker. Confirm those units before translating the example into an order.
Make the Stop Fit the Invalidation
The example places protection above the relevant high and supply area. A familiar fixed distance should not override the structure. If the true invalidation is farther away, the options are to reduce size, wait for a better entry, or skip the trade.
For a simple cash-risk estimate, divide the risk budget by the stop distance multiplied by the instrument’s value per point, allowing for costs. Actual losses may exceed that estimate when price gaps or execution slips. Stop orders do not guarantee the stop price.
A Zone Can Work, Then Fail
The video describes subsequent visits: another reaction occurs, then a later return breaks through the zone and the area begins acting as support. This is a useful reminder to update the chart rather than treating the first profitable reaction as permanent validation.
Likewise, price continuing beyond the original target does not prove that the exit was wrong. Judge the target against the plan and a larger sample of comparable trades, not the maximum favorable move visible afterward.
What to Record
Save a chart before the return and another after the trade. Record the daily context, lower-high reference, zone boundaries, confirmation, alert time, actual entry, stop, target, costs, and outcome in R. Separate trades taken promptly from late entries. That makes it possible to investigate whether waiting for confirmation improves net results or mainly worsens entry prices.
This remains a discretionary workflow. A script would need additional definitions for selecting supply zones and judging rejection, so a generic automated strategy would misrepresent the lesson.
Final Takeaway
Use the zone to prepare, the alert to pay attention, and current structure to decide. The opportunity must still offer sensible risk and reward when you are ready to act.
Risk Disclosure
This article is for educational purposes only and is not financial advice or a recommendation to buy or sell any security. Trading involves substantial risk, including loss of capital. Leverage can magnify losses, and stop orders do not guarantee an execution price. Examples and historical results do not predict future performance. Account for fees, spread, slippage, and your own financial circumstances before trading.
CandleChasers is independent of the video creator. This article provides educational analysis of the source material; it does not verify the creator’s earnings or endorse paid products.