To The Moon

$Tesla Motors(TSLA)$ $Amazon.com(AMZN)$ 

This is our follow up post to What is a demand zone . If you haven't read i would suggest to read it and then come here.

Demand zones are of 2 types

1. DBR (Drop-Base-Rally) 
2. RBR (Rally-Base-Rally)

DBR =Big bearish candlestick + Base candlestick + Big bullish candlestick

Criteria for candlesticks

All the big candlesticks do not represent an impulsive wave. That’s why you should follow strict guidelines.

• The body to wick ratio of big candlestick must be greater than 70%
• Base candlestick must have body to wick ratio less than 50%

How to draw demand zone in DBR?

The base zone is directly proportional to thedemand zonein the drop base rally pattern. Draw a rectangle by using high and low base candlestick and extend it to right.

The base candlesticks can be more than 1. But you should always take the highest high and lowest low of base candlesticks to draw a demand zone.

Remember big candlesticks will always remain two but base candlesticks can be more than 1.

Practical Example : All theory but no practical make you dull ,so let us see one 

Let us apply what we have learnt on the monthly charts of TESLA.

In the below chart you can see a DROP BASE RALLY zone market.

When price again tested those levels , tesla zoomed from 35 $ to1243 $ in next 2 years.

Wow what A magical move!!!

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Tesla

RALLY BASE RALLY(RBR)

Rally base Rally =Big bullish candlestick + Base candlestick + Big bullish candlestick

The same rules that apply to DBR applies to RBR also.

So let us jump to the practical directly for this.

In the same tesla chart you can see how rally base rally worked.

Bitcoin example

The below rally base rally in bitcoin is yet to be tested . so in future whenver price tests this zone , price may give a good reaction.

You can post more questions related to this post in the comment section and we will try to cover them in our next post .Till then stay tuned