2) Timely exit

A good supply zone is characterized by a short consolidation. Good supply zones are somewhat narrow and do not hold too long. A shorter consolidation zone works better for finding re-entries during pullbacks that are aimed at picking up open interest.

The scenario below shows a supply zone during which the price just spent a handful of candlesticks trading sideways. Such behavior shows a great imbalance between buyers and sellers because the price immediately resumes trending.

When the price returns to the supply zone the next time, the market picks up more selling interest once again and starts trending lower, away from the supply zone.

Bonus tip: in trading, the scenario above is called "drop base drop". The supply zone occurs within a strongly trending market phase. The shorter such base phases, the stronger the overall downtrend is.