Curve & Location Analysis
The price curve concept
Imagine the entire move from the most recent swing low to swing high as a curve from bottom to top. Zones near the bottom of this curve are 'on discount' — better location for buying. Zones near the top are 'expensive' — better for selling. The middle is equilibrium.
The three-part split method
Step 1: Mark the nearest fresh supply zone (proximal) above current price and the nearest fresh demand zone (proximal) below. Step 2: Divide the gap between these two proximal lines into three equal parts. Step 3: Bottom third = LOW location (favour buying/demand). Top third = HIGH location (favour selling/supply). Middle third = equilibrium.
Trading the curve
Low location + demand zone = best setup (discount price + buyers' territory). High location + supply zone = best setup (premium price + sellers' territory). At equilibrium: apply the trend. If trending up — slight buy bias. If trending down — slight sell bias. Pure sideways at equilibrium = best skipped.
Location as a filter, not a rule
A perfect demand zone at high location on the curve is a warning sign — price may bounce briefly but sellers are nearby above. A demand zone at low location with a strong Trade Score and trend alignment is the golden combination.
Practice checklist
- Mark nearest fresh supply proximal and nearest fresh demand proximal
- Divide the range between them into three equal parts
- Bottom third: favour demand setups
- Top third: favour supply setups
- Middle/equilibrium: require trend direction as tiebreaker
Mistakes to avoid
- Studying a demand zone at the top third of the curve — poor location, sellers are nearby
- Ignoring location entirely because the zone looks clean
- Forgetting to update the supply/demand reference points as the market moves