In my previous article series “The Hunt for Liquidity” I argued why traditional technical analysis tools are useless and even more – doomed to fail because these are targeted by market movers in the liquidity hunt process. In this series I will explain some price action reading insights that will help to predetermine upcoming movements.
Market sentiment. Often technical sentiment and fundamental sentiment differs, as technical correction is exactly the case, when price moves against the fundamental sentiment. Market sentiment from technical stand point represents the formal trend and it is one of the main aspects to consider when reading price action (further in the article – PA). Make no mistake, sentiment of retail traders and their ongoing exposure produced by various retail brokers have little to do with the formal sentiment. Basically – when higher high (further in the article - HH) is made or long time consolidation is broken to the upper side – sentiment changes to bullish and vise versa. It’s important to understand sentiment (or the formal trend) correctly, because according to the ongoing sentiment – PA must be read differently and different patterns must be look for.
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