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Showing posts from September, 2018

What No One Tells You About Markets Sentiment ?

After gaining a knowledge base in fundamental analysis has to be converting that knowledge into action. A key weakness often mentioned in using fundamental analysis is that it is thought of as being too macro a viewpoint. Fundamental forces are perceived to not be actionable for day-to- day and minute-to-minute trading. This is a false viewpoint. Fundamental forces are not abstract concepts. They act on prices through a transmission mechanism: sentiment. Sentiment acts like gravity and exerts a force shaping price direction.

Applying the concept of sentiment provides a necessary increase in granularity to detect what is actually happening with price action. For example, the conventional description of a currency pair is that it is bullish or bearish. Traders describe prices as being in an uptrend, downtrend, or in consolidation. Further frequent descriptions are that the trend is being probed or broken. Moreover, the price may be in a bullish trend but retracing. All these descriptions…