I just noticed that amidst these tense global situations, the fundamental principles of supply and demand remain the most important drivers of asset prices, whether it's stocks, energy, gold, or even digital assets. But what exactly does supply mean, and how can we apply it to investing?

Honestly, supply and demand are about buying and selling desires. But to understand them more deeply, we need to look at each one separately.

Demand (Demand) refers to the desire to buy goods or services at various prices. When we plot this demand, we get a demand curve that shows how much buyers want to purchase at a certain price, or conversely, the maximum price consumers are willing to pay for a specific quantity.

The law of demand tells us that the desire to buy is inversely related to price. As prices go up, demand decreases; as prices go down, demand increases. Why is this? Because when prices change, they affect demand in two ways: income effect, where lower prices mean we can buy more with the same amount of money; and substitution effect, where a decrease in the price of this product might lead us to switch from other products to this one.

As for supply, what does it mean? Supply (Supply) is the desire to sell goods or services at various prices. When we plot this, we get a supply curve that shows how much sellers are willing to offer at a certain price, or the minimum price at which sellers are willing to sell a certain quantity.

The law of supply is opposite to demand. The desire to sell is directly related to price. As prices increase, the willingness to sell also increases; as prices decrease, the willingness to sell decreases. This is because higher prices motivate sellers to offer more.

What’s interesting is that the actual market price isn’t determined solely by demand or supply alone but at the point of equilibrium, where the demand and supply curves intersect. At this point, price and quantity tend to stay stable. Why? Because if the price rises above this point, sellers want to sell more, but buyers want to buy less, leading to excess inventory and a price drop. Conversely, if the price drops, buyers want to buy more, but sellers want to sell less, leading to shortages and a price increase.

This is why understanding supply and demand is crucial for investing. If you can predict how demand or supply will change, you can forecast price movements.

In financial markets, factors influencing demand include economic growth, interest rates, liquidity in the financial system, and investor confidence. Factors affecting supply include corporate policies, new listings, and regulatory requirements.

A notable case is the event in March this year when the Strait of Hormuz was closed due to the Iran conflict. Crude oil passing through this point accounted for about 20% of the world’s supply, suddenly disappearing from the market. This was a situation where supply sharply decreased while demand for energy (demand) remained steady. The result was a rapid spike in oil prices due to the shortage.

For traders, this supply and demand principle is used in technical analysis with tools like candlestick analysis. For example, a green candlestick (closing price higher than opening) indicates buying pressure, while a red candlestick (closing lower than opening) indicates selling pressure. Trend analysis also helps: if prices keep making new highs, demand is strong; if they keep making new lows, supply is strong.

Finding support and resistance levels also relates to supply and demand. Support levels are often points where buying interest is waiting; resistance levels are points where selling interest is waiting.

The Demand Supply Zone technique is a popular example of applying this principle to trading. It looks for moments when the price starts to lose balance, either surging or plunging sharply. Afterward, the price consolidates within a range. When the price breaks out of this range, it can signal a potential entry point.

Patterns like Drop Base Rally (DBR) occur from excess supply: prices fall rapidly, then consolidate. When buying pressure returns, prices break above the range and rise. Conversely, Rally Base Drop (RBD) results from excess demand: prices rise quickly, consolidate, then fall sharply when selling pressure returns, breaking below the range.

Often, prices tend to continue in the same trend rather than reverse, leading traders to encounter more continuation patterns like Rally Base Rally (RBR) in an uptrend or Drop Base Drop (DBD) in a downtrend.

In summary, supply and demand are key components in determining prices. Whether in economics or trading, understanding them well allows you to read the market better and make more informed investment decisions.