Just noticed why asset prices fluctuate like this. The truth is, it all stems from an imbalance of demand and supply, which drives everything in the market—whether stocks, gold, energy, or even digital coins.

Simply put, demand and supply are about buying and selling desires. When more people want to buy, prices go up. When more want to sell, prices go down. What's interesting is the point where both sides are equally strong—that's the equilibrium point—where prices tend to stay stable.

We view demand as the desire to buy goods at different prices. When prices drop, people want to buy more. Conversely, when prices rise, demand decreases. This happens because of two effects: income effect (when prices fall, our real income increases) and substitution effect (when prices drop, this good becomes cheaper compared to others).

Supply works the opposite. When prices go up, sellers are willing to sell more because they gain higher profits. When prices fall, sellers are less inclined to sell.

In reality, demand and supply are influenced by other factors too, not just price. These include consumer income, future price expectations, tastes, seasons, government policies, and technology. In financial markets, macro factors like interest rates, economic growth, and investor confidence also play a role.

Recently, the Strait of Hormuz was closed due to regional conflict, causing about 20% of the world's crude oil passing through that point to suddenly disappear from the market. This is a supply shock because supply sharply decreased while demand remained the same. The result? Prices surged due to shortages.

In the stock market, demand and supply work similarly. When good news comes out, more people want to buy, and prices rise. When bad news hits, people are willing to sell, and prices fall. Analysts often use tools like candlestick charts—green candles indicate buying dominance, red candles indicate selling dominance.

There’s a technique called Demand Supply Zone used to time buy and sell points. When prices rally quickly and then pause in a base before rallying again, it’s called RBR (Rally Base Rally), which can be used to identify entry points. Conversely, when prices drop sharply, pause, and then drop again, called DBD, it signals a downtrend.

Understanding demand and supply isn’t really difficult, but it requires practice to interpret real price movements. Both fundamental analysts and technical traders use these principles to forecast prices. If you understand that prices result from the battle between buying and selling forces, you'll see the market more clearly.