I've just noticed that supply and demand are among the most fundamental mechanisms of the market. Whether it's stocks, oil, gold, or even digital assets, their prices all depend on this, especially now when the economy is under stress.

Let's understand what supply and demand really are. In short, they are the buying and selling interests. When these two forces clash, they determine the actual market price.

On the demand side, when prices decrease, people want to buy more. Conversely, when prices rise, the desire to buy decreases. Simple, right? But importantly, demand isn't solely dependent on price. Other factors include buyers' income, confidence, or even unexpected global events, such as the war in the Middle East, which can suddenly spike oil demand.

As for supply, it's the opposite of demand. When prices go up, sellers want to sell more because margins improve. But if prices fall, sellers will reduce the amount they sell. Supply is also affected by production costs, technology, or even tax policies.

A clear example is oil. When the Strait of Hormuz closed in March, about 20% of the world's oil passing through that point disappeared from the market, causing a severe supply shortage. Meanwhile, energy demand remained steady. The result was a rapid increase in oil prices.

When the supply and demand curves intersect, that point is called equilibrium. That's where the market accepts a certain price and quantity. If the price rises above that point, excess inventory occurs, causing prices to fall back. If the price drops below, shortages occur, pushing prices up again. The market has its own mechanisms to adjust back to equilibrium.

In financial markets, supply and demand still play a role, but it's much more complex. Macroeconomic policies, investor confidence, liquidity in the system, corporate policies—all influence supply and demand.

For stocks, whether prices go up or down depends on which side—buying or selling—has stronger momentum. If news indicates the company will grow, buyers are willing to pay higher prices, and sellers hold back, pushing prices up. Conversely, if the news is negative, buyers hold back, and sellers rush to sell, causing prices to fall.

The demand-supply zone trading technique uses this principle to time entries. When prices rise rapidly, it indicates strong demand. When prices plunge, it shows strong supply. Afterwards, prices tend to pause within a range. Then, with new factors, prices break out of that range and continue moving. Traders can enter trades at breakout points.

In summary, supply and demand seem simple but are deeply profound. Understanding this well can help you better predict prices. Whether in fundamental analysis or technical analysis, both rely on this same principle, just viewed from different angles.