Forex price movement what makes the price a simple question? Yes but most traders get it wrong, they either think its supply and demand fundamentals or prices move to some higher god on charts - neither is true.
Prices move based upon the sentiment of the people trading - they all come together to make a price so the equation for price movement is:
Supply and demand Fundamentals + investor Perception of them = Price
Lets look at why technical analysis and fundamental analysis have limitations and two great sentiment indicators you can use to add to help you judge sentiment and make bigger profits.
You can't trade the fundamentals in isolation. Why?
Because all the facts are there for people to see - but we all draw different conclusions from what they mean colored by our emotions. You can't trade them we all have the information now in a split second and it depends on sentiment toward them which way they go.
Charts don't move to a scientific theory that many people believe.
You will find many chartists claim that because human nature is constant, there is a scientific formula for market movement - but that's rubbish!
If there were, we would all know the price in advance and there would be no market!
Charts are useful however in showing sentiment as short time price spikes never last for long and prices always correct back to fair value, this is easy to see on a chart looking backwards - but how do you judge sentiment to back up what you see on a chart?
Answer:
Use sentiment indicators and here are 2 that if you use them, will help you spot market tops and bottoms and improve your market timing.
% Bullish
Been around for decades and is simply a poll but a very useful one.
If over 80% of people polled are bullish, sentiment is at a bullish extreme and a correction is likely and if the figure is below 20%, prices are at a bearish extreme and a rally is likely.
The above represents opinions not action and while it's useful, it becomes even more useful when used with the Commitment of Traders Report issued by the CFTC which shows action in the market place and allows you to top the worlds best traders.
How would you like to see what some of the smartest traders are doing with a track record of warning of every major top and bottom? Well you can, with this report and it's FREE.
While it is used in the futures market it's a great indicator for FX trend changes.
There are 3 groups of investors that are logged.
Commercials - smart money they own the currency and are hedging and know the long term fundamentals.
Big Speculators - Mostly large funds
(The above two groups under law have to report there positions)
Small Speculators - Everyone else.
What you need to do is watch when the commercials are buying or selling heavily and the other two groups are going the opposite way.
The commercials are hedging so only move on big spikes against their position, there not leveraged and only move when price extremes occur.
If you see a big rally and the commercials are selling, while the other two groups are buying and they are at an extreme position against each other - a trend change is at hand.
You can then look for clues too enter on your charts and get confirmation there.
People move markets not by science - but by greed and fear learn to sell extreme greed and buy extreme fear and you can catch every major trend change.
The two services above help you gauge sentiment and allow you to get market timing on your forex charts.
Forex trading is a game of odds and having the sentiment behind the chart movements is a huge advantage in seeing forex price action as it is and where it may go next.
Latest Currency Trading Articles
Trading Forex - Icelandic Krona Troubles
By: Mike P. Kulej | 11/10/2008
All currencies have experienced huge swings during recent events, but one of them truly stands out. When the dust settles, will Iceland still have own currency?
Forex Signals and Market Currency Trading
By: Shawn Burgy | 11/10/2008
Forex Signals and Market Currency Trading:
Learn what Forex Signals could mean for you.
Forex Foreign Currency Trading is here to stay.
Learn what you need to learn to begin or stay on top of the trade today.
Forex Market Currency Trading
By: Shawn Burgy | 11/10/2008
Forex Market Currency Trading:
From Currency Pairs to PIP's.
You need to keep your eyes open in the world of Forex Currency Market Trading.
There are many pitfalls, And to be armed in the ways is for the best.
Forearmed is forewarned in the world of Forex.
Understanding The Forex Calendar
By: Rick Williamson | 10/10/2008
A forex calendar (also called a foreign exchange calendar or an economic calendar) is one which is designed to help traders and investors learn about upcoming major economic information, such as the consumer price index, private medical insurance rates, and unemployment rates.
Build Your Investments With Global Forex Trading
By: Rick Williamson | 10/10/2008
Global forex trading (forex, of course, meaning the foreign exchange market) has become more and more popular in the last few decades, mostly due to the advent of the global economy. Never before has our economy been so intertwined with every other country.
Forex Training - These Traders Learned Forex in 14 Days and Made Millions!
By: Kelly Price | 10/10/2008
Here we are going to look at forex training and a famous experiment when a group of traders with no experience were taught to trade in 14 days and then went onto make $100 million in profits. Let's see how they did it and what you can learn.
Forex Trading Tips - 4 Tips You Must Understand to Win at Forex
By: Kelly Price | 10/10/2008
Here are 4 Forex trading tips that if you understand them, can allow you to enter the elite 5% of winners who make big long term consistent profits. Anyone can learn currency trading and win but these 4 points need to understood - here they are...
Free Forex Trading System - the One Enclosed is Free But Does it Work?
By: Kelly Price | 10/10/2008
Yes it does and it's made countless millions, for savvy traders all over the world and beats most of the forex robots sold. In this article, we will show you how and why it works and why this free Forex trading, could bring you currency trading success.
Finance 
