Forex Club has released a Market Sentiment Indicator!
Forex Club has released a new indicator named the Sentiment Index, which may prove to be one of the most useful indicators offered to date. The Sentiment Index measures the contractual volume of the company’s positions during a requested timeframe to give traders an insight of the direction of positions held by fellow traders.
By measuring the volume, traders will get an idea of what percentage of the company’s traders is holding a long position on a specific currency pair, and what percentage is holding a short position. Traders can use this valuable information for spotting if a currency pair is overbought or oversold, and to spot the general trend of the pair.
Market Sentiment Indicator is available for clients with Platinum service package and higher into the company’s Rumus platform. Clients who do not wish to trade with Rumus may see this index in My FXBank.
A Sentiment Index displays changes in the ratio of traders buying and selling a specific currency for a given period of time. The index is also used to forecast the best time to buy or sell a currency.
This index is a welcome addition to the tools offered by Forex Club, as it gives traders a better understanding of the current market situation in greater detail. Information provided by the Sentiment Index can help answer some of the trader's most important questions:
- What is the current situation on the FOREX market?
- How will the market behave at a future point in time?
- What are the trends at the moment?
- And, most importantly, what positions (Buy or Sell) are most traders taking for a specific currency?
The index’s values ranges from 0 to 100.
- If the number of traders selling a currency increases compared to those buying the currency, the index approaches 0.
- If there are more traders buying a currency than selling it, the index approaches 100.
- The index never reaches either extreme (0 or 100).
Overbought/oversold zones are defined at the 70/30 level.
- If the index reaches 30 or below, the currency has entered the oversold area and a reverse upward trend is very likely.
- Accordingly, the opposite response is likely if the index reaches 70 or above (the overbought zone).
- If the index is in the zone between 30 and 70, fluctuations are considered neutral.
More details in My FXBank
