Lesson 2 — Rally-Base-Drop and Supply/Demand Structures

Rally-base-drop and drop-base-rally are important supply/demand structures. They show how price moves strongly into a pause area, builds a base, and then leaves with force. The base may represent the area where orders were accumulated before imbalance appeared.

A rally-base-drop structure often creates supply. Price rallies, pauses, and then drops aggressively, suggesting sellers took control from that base. A drop-base-rally structure often creates demand, where buyers entered after a pause and pushed price upward.

This lesson teaches students how to identify clean base structures and avoid weak examples. A strong base is usually limited, clear, and followed by strong displacement. A messy base with slow departure may not represent meaningful imbalance.

Students should understand that these patterns are not just shapes. They represent a shift in participation. The best structures help define future reaction zones and risk placement.

1. Find three rally-base-drop structures.
2. Find three drop-base-rally structures.
3. Rate each zone from 1 to 5 based on base quality and departure strength.