Market Conditions & Events

A bear market is a sustained downward trend with falling prices, pessimism, and strong selling pressure. Bears believe prices will continue falling and sell aggressively.

A bull market is a sustained upward trend characterized by rising prices, optimism, and strong demand. Bulls believe prices will continue rising and buy aggressively.

Capital flows track money moving across borders for trade and investment, creating sustained demand for a currency.

A dead cat bounce is a brief rally within a strong downtrend that quickly fails as sellers regain control.

A fixed exchange rate pegs one currency to another or a basket, with the central bank intervening in markets to defend the band and maintain stability.

A floating exchange rate allows market forces to set currency values, with price reacting to macro data, policy expectations, and capital flows.

Macroeconomic trends track long-run shifts in growth, inflation, and policy that steer currency valuations and global capital flows.

Market sentiment represents the overall attitude and mood of traders toward a currency pair, ranging from bullish optimism to bearish pessimism, often driving short-term price movements.

Overbought describes a market condition where sustained buying has pushed prices to potentially unsustainable levels, suggesting a possible correction or pullback may occur.

Oversold describes a market condition where sustained selling pressure has pushed prices to potentially unsustainably low levels, suggesting a possible bounce or reversal ahead.

Risk aversion is the flight from volatile assets into safe-haven currencies like USD, JPY, and CHF when uncertainty spikes, widening spreads, shrinking liquidity, and reshaping market sentiment across asset classes.

Risk-off is market sentiment where investors feel pessimistic and seek capital protection. Money floods into safe-havens (JPY, CHF, USD, gold) and exits growth currencies (AUD, NZD, CAD). Risk-off is triggered by negative data, geopolitical crises, or financial stress.

Risk-on is market sentiment where investors feel optimistic and take more risk for higher returns. Capital flows into growth currencies (AUD, NZD, CAD) and out of safe-havens (JPY, CHF, USD). Risk-on is driven by positive economic data, rising stocks, and geopolitical calm.

Safe-haven currencies (JPY, CHF, USD) are currencies investors buy during market stress for capital preservation. They strengthen during crises as capital repatriates, carry trades unwind, and risk assets are sold. JPY is the ultimate safe-haven, CHF for European crises.

A spike is a sudden, sharp price move often triggered by news or order imbalances, leaving long wicks that can trap traders.

A squeeze is a volatility expansion that forces trapped traders to exit, producing sharp moves like short squeezes or long squeezes.

A stop hunt is a deliberate price probe through obvious liquidity pools of clustered stop-loss orders, often followed by a quick reversal once those stops provide fill for larger players.

Volatility measures the magnitude and frequency of price movements. High volatility means large rapid swings, low volatility means stable prices. Volatility is driven by news, geopolitical events, low liquidity, and risk sentiment shifts. It creates both opportunity and risk.