Is it possible that it's not supply and demand which most often determines price direction but market sentiment? http://www.marketwatch.com/story/bull-run-for-gold-is-pure-fantasy-2017-05-05 I often remind myself and others the market will do next what it's least expected to do. I believe in the long haul supply and demand move markets, but in terms of weeks, sentiment is the driver. Your thoughts? So that's how to trade, have perhaps a very long term fundamental picture, but as for trading, be a contrarian half the time. If price begins to run in the direction of fundamentals, be not surprised if it kicks you in the ass again and again just to prove it's not the brain or supply/demand which rules the market but anti-sentiment.
I think its easy to say its supply/demand. Yet, the question really should be what's causing the changes in supply and demand so that when the ducks line up (those reasons show up) for supply or for demand... You'll know which direction to go although the timing may not be exactly right. What drives the market ? Fed, ECB, IMF, corporate fundamentals, political, economic news, rumors and many other things on any given trading day. That's the special aspect about the market...one day its a political event that moves the market, another day its a ECB decision... You just need to be aware of these events especially when they are scheduled. The scary part is that markets today are so globally connected than they were 20 years ago. Therefore, something happening in Germany that's a ECB decision...it will impact the U.S. markets or vice versa. I'm just amazed that there are now algorithms taking in all that information and making bets on the price...just for a few seconds, days, weeks or months. Thus, you really got to have a level headed to be able to "drive" thru all that crap to make trade or investment decisions.
I pay no attention to MACD or RSI, but am familiar with them, how are the divergences misread? Is it that not enough attention is given?
I use bellwethers alot and often I see key Australian stocks at times lead the USA market. For example a prominent Aussie copper miner may move hard prior to copper price moving in the USA, or banks or healthcare etc.
Individuals using RSI and MACD divergence will often times read them incorrectly as reversals. These two divergences are basically the Price Driver trading system.
So what you are saying is their is an art or special skill to reading these two and once mastered this is nearly equivelent to the holy grail?
How can price movement be caused by anything other than an imbalance between buyers and sellers? Or even an absence of either? Market sentiment could be an explanation of this imbalance, sure.