Seeing the market events this month, I feel that many people still don't truly understand how supply and demand work, or why prices go up and down like that. So I want to share my understanding of this topic.

Supply and demand are not as difficult as you think. It's simply the buying desire and the selling desire that clash in the market every second. When buying demand exceeds selling demand, the price goes up. When selling demand exceeds buying demand, the price goes down. That's just how nature works.

In the financial markets, we see supply and demand very clearly during major news events. For example, in March, when the Hormuz Strait closed, over 20% of the world's oil flow disappeared. Suddenly, oil supply sharply decreased while energy demand remained the same. The result was a rapid price surge. This is a perfect example of a supply shock.

For traders, supply and demand are crucial tools for market analysis. For example, candlestick analysis: a large green candle indicates strong buying overpowering selling, suggesting the price is likely to continue rising. Conversely, a large red candle indicates strong selling power, and the price is likely to continue falling.

Support and resistance levels are also related to supply and demand. Support is the price point where buying interest is waiting to buy, a price investors believe is good to buy. Resistance is where selling interest is waiting to sell, a price holders want to sell at.

The Demand Supply Zone technique is something I often use in trading. There are two main types: trading at reversal points and trading in the trend continuation. In a reversal to an uptrend, the price drops sharply (Drop), then consolidates in a range (Base). When buying power returns and overcomes, the price breaks above the range and rallies (Rally). In a downtrend reversal, the opposite happens: the price rises quickly, consolidates, then breaks below the range and continues down.

Trend-following trading occurs more frequently. The price rises, consolidates, then rises again; or falls, consolidates, then falls further. I see this trend happening all the time in the market.

Understanding supply and demand helps me analyze the market better, whether from a fundamental perspective (company performance, economic growth) or technical analysis (price, volume, trend). Both are related to buying and selling forces.

If you're interested in learning more, check out asset prices on Gate. Whether stocks, commodities, or digital assets, try applying these principles to your analysis. The more you study, the clearer the picture becomes.