Sunday, January 4, 2009

Forex Prices - the Most Important Variable to Study for Huge Gains

Forex prices you want to know where there going so what's the most important variable. Supply and demand fundamentals - NO. A forex chart formation - NO The single most important variable is enclosed in this article.
It's the bullish or bearish sentiment of the participants.
I did a study of this 2 days ago on the dollar euro pair and since then the Euro declined by 400 pips and I said this in opposition to most of the market - does that make me smart or clever? Not at all, I just used some simple tools and stepped back to measure the psychology and you can use it to.
Let's take a look at this in more detail.
We all know the supply and demand fundamentals and the news won't help us make money as not only is it discounted in the price straightaway, but where prices go depends on how investors perceive them.

Proof of this is that markets always collapse when their most bullish and rally when there most bearish.T his is because humans dominated by greed and fear push prices to far either up or down and once prices have gone to far prices return to fair value. Of course away around this is to study forex charts and simply follow price action.

Forex charts are an excellent method of trading - but forex prices can give patterns that are false and it's a game of odds not certainties - so how about if we can add an extra filter in, to spot the reliable chart patterns and give more validity to them? Well you can and this will give you more confidence in executing your trading signals.

Your looking for formations where greed or fear have pushed prices to far from fair value. History show that short sharp price spikes are temporary and prices return to fair value.

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