Understanding buying and selling pressure in the market: The key to stock price prediction

General investors often wonder why stock prices go up or down. The answer is very simple — everything depends on buying and selling pressure. In fact, demand and supply are fundamental mechanisms that control the movement of all financial assets, whether stocks, currencies, or commodities.

What are Demand and Supply? The Main Components of Price Determination

Demand refers to the desire to purchase goods or services at various price levels. When we look at stock prices from this perspective, we see the desperation of buyers to own the asset. The (Demand Curve) shows the inverse relationship between price and the quantity buyers want — as the price rises, demand decreases, and vice versa.

Supply is the desire to sell goods or services at different prices. The (Supply Curve) shows a direct relationship with price — as the price increases, sellers are more eager to offer, while at lower prices, they reduce the quantity they are willing to sell.

The point where the demand and supply curves intersect is called equilibrium (Equilibrium) — this is the price and quantity that the market accepts and is naturally stable.

What Factors Drive Buying and Selling Pressure in the Financial Markets?

The Drivers of Demand

Demand in the stock market is not random; it stems from economic conditions — when interest rates are low, investors seek returns elsewhere. They flock into the stock market, causing demand to surge. The liquidity of the financial system also plays a role — when there is enough money, investors are more willing to take risks.

Investor confidence is a key factor influencing demand — when company profits are expected to rise, economic forecasts are good, or positive news emerges, buyers become eager. They demand more shares.

The Drivers of Supply

On the seller’s side, fewer shares — if a company decides to buy back its stock, the floating supply decreases, reducing supply. Conversely, issuing new shares or an IPO increases the supply of securities.

Market regulations also impact supply — for example, Silent Periods that restrict major shareholders from selling, or tax policy changes, are variables that alter sellers’ willingness.

Why Is This Important for Investors and Traders?

In the real market, stock prices are like commodities — they are subject to the laws of demand and supply. If you can predict how buying pressure is adjusting and where selling pressure is heading, you can estimate where prices should go.

For fundamental analysts (Fundamental Analysts) — they look at financial statements, quarterly profits, or growth forecasts. These factors influence buyer expectations. Good news means buyers dominate; bad news means sellers take over.

For technical analysts (Technical Analysts) — they read candlestick charts, analyze volume, and study price action to monitor real-time buying and selling pressure.

Application: From Theory to Actual Trading

First step in setting buy positions: Demand Zone Drop Base Rally (DBR)

Imagine the market sees negative news and heavy selling pushes the price down quickly, then the price stops falling — this is a “Demand Zone,” where buyers start to step in. The price oscillates after the decline (Base Formation). When good news arrives, the price breaks out from the base (Rally) — this is a clear entry point. Traders set a (Stop Loss) below the entry and execute the trade.

The second step in setting sell positions: Supply Zone Rally Base Drop (RBD)

Conversely, the market continues to rally (Rally) within the “Supply Zone” — an area where sellers are waiting to offer at higher prices. The price starts to oscillate within a (Base). Then, bad news or negative factors come in, and selling pressure overcomes, causing the price to break below the base (Drop) — a sharp sell signal.

Trend continuation patterns: Continuation Patterns

Usually, after a pause, the price “misbehaves” — so trading with the trend (Continuation Trading) is a more common strategy.

• Demand Zone Rally Base Rally (RBR): Price moves up (Rally), pauses to form a base (Base), then continues higher (Rally) — demand remains strong, and you stay in an uptrend.
• Supply Zone Drop Base Drop (DBD): Price plunges (Drop), pauses to form a base (Base), then continues lower (Drop) — supply remains strong, and you stay in a downtrend.

Candlestick Analysis and Support/Resistance Levels

Green candles (Close > Open) indicate demand is strong; buyers can hold their ground. Red candles (Close < Open) show selling pressure dominates. Doji (Doji) candles, where open and close are close, indicate indecision — both sides are fighting equally, signaling uncertainty.

Support (Support) levels are where buyers are very confident — they believe the price is attractive here. When the price reaches these levels, they buy, causing the rally to resume. Resistance (Resistance) levels are where sellers wait at higher prices. When the price hits these levels, they sell, preventing further rise, and the price stalls.

Summary: Demand and Supply as Market Wisdom

Demand and supply are not just old economic concepts — they are dynamic tools in the hands of investors and traders. Whether you use fundamental analysis, technical analysis, or both, understanding where buying and selling pressures originate and how they change — is the secret to accurate stock price forecasting.

The most important thing is to practice with real experience. Study Demand and Supply Zone patterns in the securities you are interested in. Observe how often these structures repeat. As your understanding deepens, demand and supply will become your allies, not enemies, in your trading journey.