In the context of cryptocurrency trading, a discounted or demand zone refers to an area on a price chart where the price of a cryptocurrency is considered to be undervalued or trading at a discount compared to its perceived fair value or intrinsic worth.
These zones are identified by technical analysts and traders as potential areas of strong buying interest or support, where the price may find a temporary bottom and potentially reverse its downward trend.
Discounted or demand zones are typically identified by looking for areas on the price chart where the price has experienced significant pullbacks or retracements from previous highs, often in the range of 30-50% or more. These zones may also coincide with key technical support levels, such as previous resistance levels that have been broken and flipped to support, or areas of high trading volume and liquidity.
Traders may use these discounted or demand zones as entry points for long positions, with the expectation that the price will rebound from these levels and continue its upward trajectory. However, it's important to note that the identification of these zones is subjective and may not always accurately predict future price movements.
