Lesson 2 — Potential Reversal Zone: PRZ
Learn how a Potential Reversal Zone forms when Fibonacci levels and market structure align.
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Login to Track ProgressA Potential Reversal Zone, or PRZ, is an area where several technical measurements align. It may include Fibonacci retracement, extension, projection, support/resistance, supply/demand, or trend structure. The word “potential” is critical because a PRZ is not a guaranteed reversal zone.
This lesson teaches students how PRZ areas are built and how to use them responsibly. A good PRZ focuses attention. It tells the trader where to watch price behavior, but not where to enter blindly.
Students learn that confirmation matters. Price reaching a PRZ is only the first step. The trader should then look for rejection, slowing momentum, liquidity behavior, structure shift, or other evidence that the zone is active.
PRZ analysis helps build scenarios. It should define where the trader is interested, what confirms the idea, where the idea fails, and what target logic may be reasonable.
1. Build two PRZ areas with at least two confluence factors.
2. Mark confirmation behavior after price reaches the PRZ.
3. Find one failed PRZ and explain why it failed.
- 1. What does PRZ mean?
- 2. Why is “potential” important?
- 3. What creates PRZ confluence?
- 4. Why should traders avoid blind entries?
- 5. What can confirm a PRZ reaction?