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7 Technical Analysis Indicators To Know Market Psychology

The term market psychology is indeed often used by financial tools or analysts to describe market movements caused by elementary factors, but there are some technical markers that are claimed to make it easier for traders and investors to more accurately predict price goals based on changes in affection.

The claim is also based on the alibi that price and load movements are changes or shifts in affection, such as fear and greed. In fact, every technical indicator is born based on the principles of market psychology, so that a description of price behavior in the market can be recognized by understanding the use of the technical indicator tool.

This post will discuss the following descriptions of market psychology, along with some technical indicators that can make it easier for you to understand the meaning of each price movement of a product in the market.

Market psychology is different from trading psychology

Derived from conventional financial philosophy which assumes that prices are always based on logical estimates, but then fail to predict the consequences of irrational intellectual tendencies of trading in general terms. So, although both share attitudes that are based on emotional and psychological aspects such as greed, worry, anxiety, and doubt, the two cannot be equated.

Market psychology refers more to the attitudes and affections of market players in broad terms, which can influence changes in price preferences. On the other hand, trading psychology is only observed and affects only one person. Here are some markers that you can use to master market psychology the easy way.


Moving Averange Convergence Divergence or MACD for short is a common technical marker that depicts the bond between 2 moving averages in a price style. Because the 2 moving averages in this marker can be used to see the style and momentum, the MACD is also often used to calculate if the price is going to be bullish or bearish.


One of the markers created by J. Welles Wilder, this simple is often used to identify goals and measure the strength of a style. Although the Averange Directional Index or ADX is categorized as lagging or slow in estimating price movements, it can still be expected because of its effectiveness in identifying market psychology. In principle, these markers indicate when the force begins to build and weaken, to what extent the force is.


This Momentum marker is also often called the Rate of Change (ROC), because it measures the percentage change in price between the current price and the price some timeframe earlier. The method of using the Momentum marker is also easy, the momentum line will rise when the trend of the force is still strong, and the opposite will go down when the force weakens. Thanks to its usefulness, the Momentum marker is considered to be a tool to identify market psychology.

Williams Percent Range

Williams Percent Range or %R, is a marker centered on the closing price as the bottom line of its manufacture. This marker made by Larry Williams proves the bond between the closing price and the price range, so %R can take into account the retrogression of price expectations from several candles before a real reversal occurs, through overbought and oversold situations.


Almost similar to the William Percent Range, Stochastic markers are also used to determine if there is a trend reversal ability. By showing overbought and oversold conditions, Stochastic is also a reference for how strong the force will continue or turn around. If the closing price is far from the lowest price in an oversold situation, then it is likely that the price will turn around. Likewise with the opposite.


Measuring the influence of market psychology with a method that is elementary close to % R, the Relative Strength Index or RSI can also display the market situation through overbought and oversold situations. Using the closing price as a situation determination, this indicator is thought to help you to identify the psychology of the market and estimate changes in market affect.


One of the best markers to identify the affect of market psychology is Load capacity which estimates the overall load power of a trade. In fact, the Loadability marker is a dimensional depiction of the emotional state of most investors, which has an effect on the expectations of price movements. If the load indicates a small overall trading load, perhaps the style will last longer.


Technical analysis is often used when looking at price charts to create patterns that indicate the intention of a style movement. Developers of technical markers such as Wilder and Williams, also believe that trend patterns are continuation or trends reversal is the result of information from market psychology that is processed in markers.

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