Hi All,
What’s the point of doing fundamentals when the market sentiment can take nearly the opposite view? Does market sentiment eventually retrace back towards fundamentals or does market sentiment feed straight from the market makers?
Why do you say that? Do you have an example where fundamentals and sentiment disagreed? We must not confuse sentiment with price action.
Hmm I think this thread will giving definition about sentiment analysis, I am sometime hear about this matter but still don’t really understand with explanation about sentiment analysis, whether this is similar with price action or as trader learn like as using elioth wave theory?
Sentiment to me is more of a qualitative assessment, which takes its cues from data but then translates that into a more subjective interpretation of the facts…
Ok…maybe I’m confusing price action with sentiment. If the economy is perceived as strong but it doesn’t reflect in the currency. Without specific examples, I see this from time to time.
It is such a complex picture and I am not qualified to comment.
From my very limited experience of the markets as a retail trader, I would agree that often a ‘strong’ set of economic data can result in counter-intuitive moves in a currency (dropping where it should rise, and viceversa)…
Sentiment literally means ‘feeling’: therefore, if a market ‘feels’ positive about a currency, it will lift it even in the face of negative data (within reason) for that country, and vice versa; this is where sentiment and data can disagree…
I think you need fundamentals as well since that’s the basis. Things may be totally different in real life, but… indicators, for example, do not work all the time, but it certainly increases the success rate. Or do you mean something else?
This is a very relevant question. Sentiment is not just what mood market particants happen to be in at any given time regardless of the fundamentals. It is important to keep in mind what is actually moving price.
In the same way that technicals are using past data to project the probable future direction, fundamental data releases are also announcements of what has happened in the recent past. All speculative participants in the market have the same perspective when they enter the market - that price should be somewhere else other than where it is now, otherwise there is no reason to [I]be [/I]in the market. The result of this perspective is that price will move in the direction of the majority opinion. This forms the “sentiment” and that sentiment is already discounted in the current price even before the anticipated result is achieved.
So when data releases do not fully support this sentiment there will be those that pull out or even reverse their view. In the same way, if the anticpation is a specific event such as a rate increase then as soon as that event happens the participants will close their positions ready for something else - which causes a contrarian move in price.
It is worth bearing in mind that speculative positions do not ultimately drive price. The underlying pressure comes from the foreign currency transactions related to commercial and investment activity where huge amounts of money are moving around the globe. And the the effect of these is by no means clear. For example US dollar strength is not purely related to the US economy nor is the growth of a large company a good sign for its own nation. For example, if a large German company completes a major deal with a customer, its contractual currency may be in USD and not Euros, its main manufacturing plant and employment in Taiwan and not in germany, and its accounting process through a holding company in Holland - so where exactly does the benefit of this major deal actually appear?
So there is so much slack between what economists and analysts project and what individual data and news releases suggest. Look at it this way:
We are all driving along happily in our cars towards a common destination - at least we think we are, but then a thick fog descends upon the road. Some people continue in the belief that the route is correct, but as we pass turnings to the right and left some start to have doubts and pull into a lay-by to think about it some more. But others decide that there is a better and quicker route another way and turn off the route completely - that is sentiment. No-one “knows” we just follow our “nose” 
Hello, I have also noticed that, sometimes market moves negatively in positive news result! So, I believe we traders need to work with market context (technical analysis)! On the other hand, fundamental analysis is not only mean, Actual- Forecast- Previous! We have to know fundamental data’s with details! In my live trading, I work with both kind of market analysis!
Trading on fundamentals is a good and rewarding if you act upon it correctly not act blindly you should keep away your sentiments while trading because your plan and safety should be followed correctly not your feeling are much important.