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Forex (Video): Fear in the Markets? Expect a Trend Change
Sentiment extremes can give you important clues about market direction.

By Vadim Pokhlebkin
Thu, 06 Aug 2009 14:30:00 ET
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Think back to last fall. Stocks around the world were falling like a rock, but the U.S. dollar, to most people's surprise, was rallying against the euro -- on fear, said market commentators; fear and hope that when everything else crumbles, the dollar would still stand. But do you remember what happened after everyone and their brother had shifted into the dollar? That's right -- it fell hard. Ironically, a sentiment extreme in favor of the dollar marked a huge top for the currency. 

Fast forward to today. The U.S. dollar has just put in a new low for the year. Now the same commentators say that the dollar is falling because of "increasing risk appetite" for other assets. We are finding ourselves in a similar environment -- but in reverse: Today, people shun the USD. Could it mark a dollar bottom and a start of the rally?

Before you answer this, watch this free classic video that editor of EWI's intensive Currency Specialty Service Jim Martens recorded for his subscribers on October 24 of last year, right before the USD began falling. There is a very important lesson in this free video.
 
 
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Tags: U.S. dollar, euro
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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.
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