I just thought of an important topic that many people often overlook: supply and demand. It’s not just a theory in economics—it’s a mechanism that truly drives prices.

It happens everywhere—stocks, energy, gold, even digital assets—all follow the same rules. To be direct about it, what is supply? It’s the willingness to sell. What is demand? It’s the willingness to buy. When these two meet, the price is set.

But it’s more complex than that. The law of demand says that when prices go down, people want to buy more. On the other hand, when prices go up, buying demand decreases. Why is it like this? There are two reasons: the income effect and the substitution effect. For example, when prices fall, your money (in terms of purchasing power) becomes more valuable—or you might switch to buying this item instead of another because it’s cheaper.

As for supply, it’s the opposite of demand. When prices rise, sellers are willing to sell more because they can earn more profit. When prices fall, sellers don’t want to sell as much. There are many factors that affect supply—production costs, technology, and expectations about future prices.

What’s crucial is equilibrium. When the demand curve and the supply curve intersect, that’s the point where prices can hold steady. If the price is higher than that point, sellers will supply more, but buyers will buy less. The result is excess inventory, and prices have to come down. And if the price is lower than the equilibrium point, buyers want to buy more, but sellers don’t want to sell as much. Then the goods become scarce, and prices must rise.

Let’s look at a real example. The Strait of Hormuz closed in March due to heightened tensions, removing 20% of the world’s crude oil from the market. This is what’s called a Supply Shock—supply drops sharply while energy demand (demand) stays the same. The result? Oil prices skyrocketed like a rocket.

Financial markets are even more complex because there are many factors that affect demand—interest rates, liquidity in the system, investor sentiment, earnings forecasts. All of these determine how many people want to buy stocks. Meanwhile, the supply of stocks can change when a company issues new shares or buys back shares.

When doing technical analysis, we use these ideas to observe buying and selling pressure. A green candlestick indicates that demand wins—its closing price is higher than its opening price. A red candlestick indicates that supply wins—the closing price is lower than its opening price. If you see a consistent upward trend, it shows demand still has strength. If you see a consistent downward trend, it shows supply is still strong.

The Demand Supply Zone technique is useful. Suppose the price drops sharply (Drop) and then stops and trades within a range (Base). When the price gains upward momentum again, it will break through the upper boundary of the range and move up (Rally). That’s an entry timing—or, if the price rises sharply and then pauses while selling pressure returns, it will break below the lower boundary and plunge. That’s a selling timing.

To sum it up simply: supply and demand are not just theories. They are the market’s lifeblood. Once you understand them, your price analysis becomes much clearer—whether it’s fundamental analysis or technical analysis. Try applying it to real data, and you’ll see that it really works.