How does price action affect supply and demand levels?

Price action takes central role when trading with supply and demand levels. In fact, price action complements supply and demand levels/zones and vice versa. The best way to confirm a supply or demand level is by double-checking with price action.

What is supply and demand in economics?

supply and demand, in economics, relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory. The price of a commodity is determined by the interaction of supply and demand in a market.

What happens if demand exceeds supply?

When demand exceeds supply, prices tend to rise. When supply is greater than demand, prices drop; when demand is greater than supply, prices rise. Price elasticity of demand refers to the sensitivity of prices in relation to demand. Inelastic prices are those that have a weak influence on demand.

What drives price movements in a market?

When it comes to price movements in any market, whether it be stocks, futures or Forex, the driving force is supply and demand. When demand outstrips supply, prices go up. When supply is greater than demand, prices fall.