I just noticed an interesting thing about price movements in the stock market amid global volatility. The fundamental principle driving the prices of all assets is supply and demand, whether it's stocks, energy, gold, or even digital assets.

Actually, supply and demand are not just economic terms learned from textbooks. They are the actual buying and selling interests that occur in the market. When we plot these buying demands on a graph, we get a demand curve showing the relationship between price and quantity. Each point on that curve tells us how much buyers want at a certain price. Conversely, the supply curve shows the quantity sellers are willing to offer at different price levels.

The law of supply and demand is quite straightforward. When prices go up, demand usually decreases, but supply increases. And vice versa. Why is this? Because price changes affect our wallets. When prices drop, we have more money left (income effect), and we often compare prices with other goods (substitution effect). Other factors like income, preferences, the number of consumers, and expectations about future prices also influence supply and demand. Unexpected events, such as international wars, can cause oil demand to spike due to transportation route closures.

The actual market price is at the equilibrium point where the demand and supply curves intersect. This point tends to be stable because if the price rises above equilibrium, sellers will produce more while buyers buy less, leading to excess inventory, which pressures prices downward. Conversely, if the price falls below equilibrium, demand increases while supply decreases, causing shortages that push prices back up.

In financial markets, supply and demand are influenced by many factors. On the demand side, we look at economic growth, interest rates, and investor confidence. When interest rates are low, investors seek returns in the stock market. On the supply side, it depends on corporate decisions, such as issuing new shares or share buybacks, and the listing of new companies. These factors work together; when the economy grows well, new companies tend to go public, affecting market balance.

Viewing stocks as commodities, we can apply the supply and demand rules to evaluate prices. In fundamental analysis, falling stock prices indicate strong selling pressure, while rising prices show strong buying interest. These forces are driven by acquisition interest, not just a single stock. Fundamentals like earnings forecasts, company growth, or structural changes all influence supply and demand shifts.

In technical analysis, supply and demand are measured more intelligently through candlestick charts. A green candle (closing higher than opening) indicates demand wins; a red candle (closing lower than opening) indicates supply wins; a doji (opening and closing at the same price) shows a standoff between both sides. Trend analysis also helps: if prices keep making new highs, demand remains strong; if new lows are made, supply is dominant. Support and resistance levels are points where supply and demand are waiting to decide.

The popular Demand Supply Zone technique involves identifying moments when price loses balance and a new equilibrium forms. Large candles and trending price movements until a reversal point are key signals. Traders can use this method in two ways: trading at reversal points or following the trend.

A bullish reversal (DBR) occurs when excess supply causes prices to fall and consolidate, then, as buying interest returns strongly, prices break above the consolidation and rise. A bearish reversal (RBD) happens when excess demand pushes prices up, consolidates, then, as selling pressure dominates, prices break below the support and fall.

For trend-following trades, an uptrend (RBR) occurs when demand remains strong, prices rise, consolidate, and continue upward. A downtrend (DBD) happens when supply remains strong, prices fall, consolidate, and continue downward.

Supply and demand are fundamental parts that economists, traders, and investors use to analyze markets. Learning about this is not difficult if we practice applying it and study market prices. However, if you're interested in further studying price analysis and various trading techniques, tools and data are available to assist you.