Zones

"Zones" are ONE of THREE main pieces of evidence we use to make sense of the market's "story" every day.  

1) Big Picture Bias
   - LONG TERM market analysis
   - Known prior to the day starting

2) Zone Evidence​
   - INTERMEDIATE TERM market analysis
   - Support/Resistance 
   - Known prior to the day starting

3) Aggression/Box Evidence (today's real-time evidence)
   - SHORT TERM market analysis
   - Telling us what is happening NOW
   - Develops as the day unfolds

Finding Each Day's Zones:
The zones are known prior to the day.  

For ease and quickness, you can simply refer to the Daily Market Assistant each day.  The zones are listed there.    

What Do Zones Mean?  What Do Zones Represent?
Zones are my take on intermediate term support & resistance (some people call it supply/demand).  

These are areas that, when last tested, showed strong buying or selling.  In other words, these zones are either "buyer-controlled territory" or "seller-controlled territory" until proven otherwise.  

For example, a zone below the market, "should" offer support if tested.  It should be a favorable spot to consider a long.  And, if it doesn't hold, it's giving us evidence that sellers are stronger than expected.  

Remember, while zones are important, they are just ONE piece of evidence.  It's not the full story.  You always want to use them in conjunction with aggression/boxes and with the big picture bias.




















Zone Logic:
Zone logic is relatively simple once you learn the basics.   I'll break it into 3 parts:
   1) What is the "expectation" for the zone, based on where the market is right now?
   2)  How did the market react at a zone?  What information does that give us?
   3)  How do zones affect trade location and trade probability?

What Is The Difference Between Different Types Of Zones?
You might notice that I label zones with different names...such as a gap or a tail or a wave or an overlay, etc.  

There are two ways to look at this:

1)  At the beginning, you really don't need to be concerned with the different labels.  Simply think of a zone as a zone and just consider the logic (discussed earlier).  In other words, whether the zone is an overlay or a tail or whatever, just think of it as a zone and monitor how the market reacts to it.  

2)  For those interested, I teach the details of how I determine these zones.  That can be found in a later section...just not in this "quick start" guide.  

How Important Are Zones?
I think they're pretty important.  However, remember that it's one piece of evidence out of three.  That said, I typically weight the pieces of evidence in this order:
 - Aggression / Box Evidence:  40%
 - Zone Evidence : 35%
 - Big Picture Evidence: 25%