Fear and Greed: How to Catch Falling Knives?

Expert market comment made by Chief Market Analyst Alex Kuptsikevich of the FxPro Analyst Team: Fear and Greed: How to Catch Falling Knives?
FxPro | 112天前

Fear and Greed: How to Catch Falling Knives?

Sentiment in financial markets has hit its lowest point in more than five years. The Fear and Greed Index fell to 4 on Friday and remains at that level at the start of trading in the new week. In recent history, only a return of the index above 10 was the first early signal of a rebound in growth. We consider a move out of the extreme fear zone, i.e., above the 25 level, to be a more reliable indicator.

Today's index levels are the lows since the end of March 2020, when covid lockdowns stormed markets. Back then, the index's period of single-digit levels lasted from 5 to 23 March. The result was a drop of more than 30% in the S&P 500.

Even earlier, in late 2018, the market’s sharp recovery began just before fear levels rose into double digits—similar to the sell-off in August 2015. However, a return to such fear levels typically occurs near the index’s lowest points.

It is important not to rush and to wait for at least the first signs of a reversal in sentiment. Fluctuations at low, single-digit levels may not last long, but markets can fall painfully deep during this time.

For longer-term investors, a more reliable indicator is a recovery from extreme fear, i.e. a rise in the indicator above 25. Very often, this is followed by a long recovery, and buying near the bottom gives a good return-to-risk ratio.

However, a more reliable and timelier signal is a change in politicians' rhetoric. The Fed's actions primarily helped the markets. So many are hoping for a quick or even immediate change ‘right now’. In the current circumstances, this could well be a change in Trump's narrative or that of other leaders.

By the FxPro Analyst Team

規則: FCA (UK), SCB (The Bahamas)
read more
ATFX Market Outlook 29th July 2025

ATFX Market Outlook 29th July 2025

U.S. stocks finished mixed on Monday, with the S&P 500 advancing for a sixth consecutive session to reach another record close. The Nasdaq also hit a new all-time closing high amidst volatile trading, as investors gauged the impact of the US-EU trade agreement and prepared for key events later this week. The Dow Jones declined by 0.14%, while the Nasdaq increased by 0.33%
ATFX | 1小時9分鐘前
US data supports patient Fed, deal with EU boosts appetite

US data supports patient Fed, deal with EU boosts appetite

Dollar gains as data allow the Fed to stay in wait-and-see mode - US and EU secure trade deal, tariff clock is ticking for others - Wall Street at record highs amid trade optimism and better earnings - Pound slides after retail sales, yen retreats even as BoJ hike bets increase
XM Group | 18小時26分鐘前
Gold Declines as EU Strikes Trade Deal

Gold Declines as EU Strikes Trade Deal

Gold held steady at $3,330 per troy ounce on Monday following three consecutive days of declines. The metal faced downward pressure after news emerged of a trade agreement between the US and the EU, dampening investor interest in safe-haven assets.
RoboForex | 19小時56分鐘前
Gold sends negative signals

Gold sends negative signals

Gold slips below symmetrical triangle after US-EU trade deal. Technical signals lean bearish; resistance at 3,345.
XM Group | 20小時12分鐘前
Markets Rise on Extended US-China Tariff Pause

Markets Rise on Extended US-China Tariff Pause

Markets rallied as the US and China are set to extend their tariff pause by 90 days, boosting risk sentiment and weakening the US Dollar. Gold slid below $3,350, while GBP and EUR gained. AUD held steady ahead of key CPI data. Investors now await the FOMC meeting and US job reports for further direction.
Moneta Markets | 20小時32分鐘前