I've just noticed that the concepts of supply and demand remain the most fundamental for understanding price movements in financial markets, whether it's stocks, gold, energy, or even digital assets. Buying interest and selling pressure are usually the main drivers behind everything.

I happened to see an example of the Iran war that led to the Strait of Hormuz being closed in March. The impact on crude oil is a good case study showing that when supply shrinks by more than 20% globally, demand remains the same, and prices surge uncontrollably. This is what is called a Supply Shock.

This isn't as difficult as it seems. Actual demand for a product is simply the desire to buy at various prices, and when prices fall, people tend to buy more. Supply is the amount offered by sellers; when prices rise, they are willing to sell more. This is a natural market rule.

One thing to note is that in financial markets, the factors influencing stock demand are more complex than in general goods markets. Interest rates, economic growth, financial system liquidity, and investor confidence all affect whether people are willing to buy stocks. When interest rates are low, investors often seek higher returns in the stock market, which increases buying demand.

The supply of stocks depends on company decisions, such as share buybacks reducing supply, capital increases adding supply, and IPOs of new companies increasing the number of securities in the market.

When the demand and supply curves intersect, that is the equilibrium point, where price and volume tend to stabilize. Because if the price rises from this point, sellers will sell more, but buyers will buy less, leading to inventory buildup, and prices will fall back. Conversely, if the price drops, buyers will buy more, but sellers will sell less, leading to shortages, and prices will rise again.

In trading, we can use this principle for analysis, such as observing candlesticks. A green candle indicates strong buying pressure; a red candle indicates strong selling pressure; a Doji shows that both sides are equally strong.

Trend analysis is another method. If prices keep making new highs, demand remains strong. If prices keep making new lows, selling pressure is dominant. If prices move within a range, it indicates a balance.

The Demand Supply Zone technique is quite popular because it helps us identify better entry and exit points. For example, when prices drop sharply (Drop), then consolidate in a range (Base), and rally back up (Rally), this is the DBR pattern, where traders can buy at breakout points. Conversely, when prices rise, consolidate, then plunge (RBD), traders can look to sell.

Trend continuation trades are more common, such as RBR, where prices rise, consolidate, then continue upward, or DBD, where prices fall, consolidate, then continue downward.

This is interesting because if you understand supply and demand, you can better predict price movements. Whether through fundamental analysis (looking at earnings, profit forecasts, economic factors) or technical analysis (candlestick patterns, trendlines, support and resistance), your understanding improves.

Actually, this isn't very hard; it just requires practice and close observation of real market prices. If you understand how buying interest and selling pressure work, you'll see the price movements more clearly, and your investment decisions will become more effective.