I've just noticed that many people still don't quite understand supply and demand, even though it's the foundation of all price movements in the market. Whether it's stocks, oil, gold, or even digital assets.

Honestly, buying demand (demand) and selling supply (supply) are two sides that are constantly clashing in the market. When more people want to buy than want to sell, the price goes up. Conversely, when more people want to sell, the price drops. That's how it works.

The law of demand states that when the price drops, people want to buy more; when the price rises, people slow down their buying. There are two reasons for this: First, when the price drops, the money in our pockets becomes more valuable, allowing us to buy more. Second, when the price drops, this product appears cheaper compared to similar items, so people switch to buy this one instead.

As for supply, it's the opposite. When prices go up, sellers want to sell more; when prices go down, sellers lack the motivation to sell. Why is that? Because when prices are high, sellers make more profit and are more willing to increase their sales volume.

Looking at real examples, suppose the Strait of Hormuz is closed. About 20% of the world's crude oil flow passing through that point suddenly disappears from the market. This is called a supply shock. The demand for energy (demand) remains the same, but supply decreases rapidly. The result is that prices spike to their highest point because of the shortage.

The key point is that the true market price occurs at the equilibrium point where the demand and supply curves intersect. If the price rises from this point, sellers want to sell more, while buyers slow down their purchases, leading to excess inventory and a price correction downward. If the price drops, buyers want to buy more, but sellers hold back, causing shortages and prices to rise again.

Applying this concept to investing can improve price prediction. In fundamental analysis, we look at how eager people are to buy a company, whether its performance is growing, or if there’s good or bad news. These variables directly affect demand. In technical analysis, we use tools like candlestick patterns, support and resistance levels to determine whether buying or selling pressure is dominant at the moment.

A green candlestick (closing price higher than opening price) indicates strong demand; buyers won the day. A red candlestick (closing price lower than opening price) shows strong supply; sellers won the day. Doji candles (open and close at the same price) suggest that both sides are balanced, and the price may stay put until new factors emerge.

When prices keep making new highs, it indicates demand is still strong; prices will continue to rise. When prices keep making new lows, it indicates supply is strong; prices will continue to fall.

There are many ways to use supply and demand in trading, such as Demand Supply Zones, which identify points where price breaks out of equilibrium, runs for a while, then consolidates. When the price breaks out of this range again, it signals a continuation of the move.

There are patterns like DBR (Drop Base Rally), where prices fall, consolidate, then rise again—good for breakout entries. And RBD (Rally Base Drop), where prices rise, consolidate, then fall—good for short entries at breakout points.

Another approach is trend-following patterns like RBR (Rally Base Rally), where prices rise, consolidate, then rise again, or DBD (Drop Base Drop), where prices fall, consolidate, then fall further.

In summary, supply and demand are powerful tools for traders and investors. Whether used in fundamental or technical analysis, understanding them well and applying this knowledge can significantly improve decision-making. The key is to practice by observing real market prices and gradually deepen your understanding.