What is the current asset price movement? Knowledge of supply and demand is the key.

This time, we will talk about demand, supply, (Supply and Demand), which are fundamental concepts in economics that are deeply important for investing. We will also discuss how these concepts help traders and investors predict stock price movements.

Buying and Selling Demand Create Market Prices

Let’s start with a simple question: What are demand and supply? In reality, they are the interaction between those who want to buy assets and those who want to sell. The balance between these two sides determines the market price.

When we categorize this, demand (Demand) is the volume of stocks or assets that investors want to hold at various price levels. If the price is low, the market is full of buyers, and if the price rises high, the desire to buy diminishes. Conversely, supply (Supply) is the volume that shareholders and other traders are willing to release at different price levels. High prices = everyone wants to sell; low prices = no one wants to let go.

When the demand and supply lines intersect, (Equilibrium) occurs. This is the price and volume that the market accepts at that moment.

Why Do Prices Rise and Fall So Dramatically?

In economics, many factors influence demand, such as investors’ income, future expectations, popularity, and the prices of related assets. Supply depends on production costs, company policies, and sellers’ future price expectations.

In the stock market, these fundamental factors take different forms:

Demand in the financial market increases when:

• Interest rates decrease (making stocks more attractive than bonds)
• The economy grows or shows positive signals in company projects
• Liquidity in the financial system increases (more circulating money)
• Investor confidence is high

Supply increases when:

• Companies raise capital or issue new shares
• Many new companies go public
• Major shareholders want to sell off

Price Movements Driven by “Surge” of Demand and Supply

Stock price movements are driven by buying and selling pressures in the market.

When demand is stronger, buyers are willing to pay higher prices to acquire stocks, causing prices to rise. This is when investors see opportunities and positive prospects for the company.

When supply is stronger, sellers are willing to lower prices to offload their stocks, causing prices to drop. This situation arises from fear or negative expectations.

When balance is achieved, prices stop moving within a narrow range until new factors come into play.

What Do Traders Aim to Do with “Demand Supply Zone”?

Modern traders have developed the “Demand Supply Zone” technique based on demand and supply principles to identify trading opportunities.

In a bright uptrend (Demand Zone Drop Base Rally - DBR): Prices drop sharply due to excessive selling (Drop), then after the decline, buying interest increases, causing the price to fluctuate within a range (Base) as selling pressure diminishes. Subsequently, the price reverses strongly (Rally). When good news or positive factors emerge, traders will enter buy orders during this Base phase.

In a confident downtrend (Supply Zone Rally Base Drop - RBD): Prices rise due to strong demand (Rally), but buying momentum slows, and selling pressure appears. Prices begin to fluctuate within a range (Base). If negative news comes out, prices break below the range and continue downward (Drop). Traders use this opportunity to sell.

Trend continuation (Continuation): Often, trends do not reverse but continue. For example, in an uptrend, prices rise and (Rally), then fluctuate within (Base), and rise again (Rally). This pattern is called RBR. Similarly, in a downtrend, prices fall, fluctuate, and fall again (DBD).

Support and Resistance: The Silent Walls

In technical analysis, (Support) is the price level where buyers are ready to wait when prices return to it. It is perceived as a fair value zone where investors are willing to buy. (Resistance) is the price level where sellers are ready to release their holdings. It is seen as a “price is high, and if it breaks out, it will go higher.”

Understanding these moments helps traders become skilled at timing.

Key Things to Remember About Demand and Supply

Demand and supply are not just old economic theories; they are the language the market speaks 24/7. Understanding them means reading the market’s mind and staying ahead of the game.

Observing trading volume, price changes, and candlestick patterns reveals which force is stronger—buyers or sellers. Learning to interpret these signals in detail, based on real daily stock prices, allows you to make smarter investment decisions.