SUPPLY AND DEMAND TRADING BY CHUNLEE CRYPTO

How supply and demand trading works?

How it controls all markets?
How why and when price moves or falls?
What happens with supply and demand when prices reverses direction?
How to use supply and demand in trading?

We have to first understand how the law of supply and demand trading works in economics
then we align it with basic premise of Technical analysis and price action[basically the
movement of price]

Before going fully into the law of supply and Demand together we must first understand….

‘’THE LAW OF DEMAND’’

The higher the price the of something, the lesser buyers will demand it. Futher
more; ‘’The lower the quantity demanded.

DEMAND CURVE
100%
90%
80%
70%
60%
PRICE

50%
40%
30%
20%
10%
0%
QUANTITY DEMANED

THE LAW OF SUPPLY

 ‘’The the higher the price of a commodity the more traders are willing to sell it.

SUPPLY CURVE

SUPPLY CURVE
100%
90%
80%
70%
60%
PRICE

50%
40%
30%
20%
10%
0%
QUANTITY SUPPLIED

LAW OF SUPPLY AND DEMAND

‘’Price will always seek the market’s equilibrium, which is the point where the demand and supply
curves cross each other’’

In other words market equilibrium is the point at which the quantity all buyers want buy is equal to the
quantity all sellers wants to sell.

When the demand and supply curves moves the point of equilibrium will change. The price wiil chase
this new equilibrium naturally.
 Demand & Supply Curve
100%
90%
80%
70%
60%

PRICE
50%
40%
30%
20%
10%
0%
QUANTITY

Point of equilibrium(price is stable here)

The market adjust the price of an asset based on the demand and supply of buyers.

WHAT THEN CAUSES MARKET TO SHIFT??

This caused by something we call supply and Demand shift.

‘’supply and demand shifts’’

Constant changes in price are caused by supply and demand shifts which are a reflection of
buyers and sellers changing their perception about the value of a market.

Price>> is just a number you see on the screen currently because the buyers and sellers (market) are
trying to seek equilibrium.

Value>> this is simply how buyers and sellers perceive price.

The perception of value changes first (this is what causes supply and demand shifts) this shift makes the
market seek a new equilibrum which makes price move up or down in the end.
 SHIFT OF EQUILIBRUM
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90%
80%
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60%
50%
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30%
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10%
0%
Category 1 Category 2 Category 3 Category 4

Series 3

(CURRENT MARTKET EQUILIBRUM POINT)

Green Arrow(DEMAND)

Red Arrow(SUPPLY)

In the chart above the green line(SUPPLY) Increased so therefore price increased so as to keep the
market at equilibrium.

TA + PRICE ACTION(TECHNICAL ANALYSIS & PRICE ACTION)

This states that we can use the recent past of price to understand the near future of price at the
moment.

It walks perfectly when the market is in a certain state of normality.

Price reverses its direction when there is a dramatic change in supply or demand

DEMAND ZONE

DEMAND ZONE
A demand zone is a low between two highs where a “a significant shift occurs.

The market will seek the new equilibrium by producing a movement up the supply curve .

Price will rise as a result of this movement up the supply curve

Price will rise as a result of this movement up the supply curve

A demand zone will form in the low between the two highs .

The Second high most be higher than the first, for the demand zone to be strong.

We can extend the zone horizontally, to project the next possible significant low.

SUPPLY ZONE

SUPPLY ZONE

SUPPLY ZONE GUIDE

The high between two lows is the place where a significant supply shift happened.

The market will seek the new equilibrium by producing a movement downward the demand curve

Price will fall as a result of this movement down the demand curve.

A supply zone will form in the high between the two lows.
The second low must be lower than the first one for the supply zone to be strong.

We can extend this zone horizontally to project the next possible high.

SUMMARY

A Demand zone happens in the low between two highs where the second high is higher than the first
one.

A supply zone happens in the high between two lows where the second low than the first one.

MAJOR ADVANTAGE OF SUPPLY AND DEMAND TECHNIQUE

1>Based on a solid principle from economics.

2>Zero Lag