MARKET ANALYTICS TEAM, MARCH 10, 2017
Invest Up Sentiment Indicator for the Euro - FEAR
The Invest Up Sentiment Indicator for the Euro rose 1.64 points in this month to 19.81, following a decrease of 7.04 points in the previous month, and a drop of 14.98 points in January.
Rated FEAR, the current reading of 19.81 indicates excessive pessimism and an oversold condition in the EUR market.
The indicator is designed to enable investors and advisors to detect irrational greed and fear in the EUR market. Our research shows that one of the best ways to forecast whether the euro will go up or down is to assess whether investors are excessively bullish or bearish. Extreme bullishness and extreme bearishness often lead to key turning points in EUR prices.
The indicator moves between 0 and 100. A figure below 30 is rated FEAR and associated with excesses in bearish sentiment resulting from investors' fear of uncertainty. On the other hand, a value greater than 70 is rated GREED and associated with excessive bullishness and greed in the EUR market. Historically, the GREED and FEAR ratings have had strong correlations with turning points in the EUR market. A rating of GREED, indicating excesses in bullish sentiment on the part of most EUR investors, often leads to a topping in the market and a downside correction. Similarly, a rating of FEAR, indicating high pessimism on the part of most investors, often leads to a bottoming in the EUR market and an upside reversal.
Using the indicator as a guide, investors will be able to dynamically adjust exposures in the euro, tactically avoid long positions when the market appears overbought, and enter the market when the indicator signals an attractive buying opportunity.