The following email was received from a YTC Price Action Trader reader who has had a breakthrough in understanding how price movement (or failure to move) can influence trader sentiment. Well done!

The next step is being able to see this effect playing out across two timeframes, seeing how the shift in lower timeframe sentiment then impacts upon the decision making (and sentiment) of the participants on the higher timeframe. Larger and more sustained shifts require a change of sentiment across multiple timeframes, often cascading from the lower to the higher.

Here's an extract from the email (Titled: "Another breakthrough for me… sentiment"):

I understand now that markets are emotional !!!!!!! The movements, the decisions are based on human emotions!!!!!

What is happening on the charts, the PA gives certain information…eg. the level was false-broken once…ok nothing to worry yet..

but if it is false broken for the 2nd time…the emotions change…it's like ohhhhh!!!??? this change of emotion will produce a certain sentiment within market participants…and this sentiment spreads either quickly or slowly……and the sentiment on the chart is reflected by price/(price bars) moving slower/quicker or accelerating in a certain direction…

this recent PA made me realize it…finally 😉

(see below)



And here's the chart he referenced: (The size has been reduced to fit on the webpage. Click on the image to open a larger version in your browser!)

shift in market sentiment

Lance Beggs

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