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The application of psychoanalysis

Pragmatism supports the survival of an analytic approach in the market. Since psychoanalysis speculates on "market psychology", it is more applicable to a fair "dealerless market". Here are a few examples of foreign exchange futures applications.

1. December 10, 2003, from 15:00 to 17:00 in just 2 hours, the dollar / yen rose 198 points from 106.75 to 108.73, a situation that many investors did not expect. At this time did not chase the yen short people also regret it. Let's recall the specific after that time. Previously, the Bank of Japan has repeatedly hinted that the yen is "abnormal" higher, although investors also expected the Bank of Japan will intervene, but did not expect the Bank of Japan will be in the non-integer point 106.75 market intervention. Careful investors will find that at 4:00 a.m. on the 10th, the dollar / yen in the hourly chart closed a long lower shadow, a full 37 points, the yen's highest touch is 106.75 the price level. Longer lower shadow indicates that there is a huge amount of money in the short yen, then the dollar / yen to start triangle consolidation, which indicates that the breakout to the upside is inevitable. Sure enough, the dollar / yen broke at 107.39, began to once higher up to 134 points. The short USD / JPY is the Bank of Japan. The Japanese government intervened in the currency market at 106.75, at that time, the U.S. dollar short news has been exhausted, so the Bank of Japan at this time to intervene in the foreign exchange market will achieve twice the effect with half the effort. Therefore, the dollar / yen "accidental" higher, should be within the expectations of investors. The psychoanalytic method can not accurately predict that at 106.75, the Bank of Japan will intervene, but will certainly analyze and predict that the dollar / yen will certainly break 107.38 resistance after the triangle consolidation and will rise sharply.

The following five points were captured in this analysis using psychoanalysis.

First, the Bank of Japan will intervene in the currency market to become a foregone conclusion, just the timing and specific point of intervention is not known (the market has the feeling of an impending turn). Second, the dollar has run out of good news (running out of good news is short news!). (There is no worse fundamental news in the near future). Third, the lower shadow is a harbinger of a turnaround (showing how difficult it will be for the yen to continue to move higher). Fourth, the triangle consolidation is a condition for a turnaround (the direction of the consolidation can be largely inferred by unfolding consolidation ). Fifth, the K-chart was easily broken at 108.38 strong resistance (which shows that the market was prepared for the direction of the latter).

On December 14, 2003, Iraqi President Saddam Hussein in his hometown of Tikrit in the basement of the U.S. military capture, and through DNA testing to verify the real its identity, the foreign exchange market appeared long-awaited good news for the dollar. But it was Sunday, the foreign exchange market is in a closed state. The market was expecting the euro to jump at the open on Monday! Sure enough, the euro jumped 132 points just after the market opened on Monday! It then stood firm near 1.2143. Why did it stay near 1.2143? Analyzing the psychological factors, a price that jumps and stays at the open must be a strong resistance level! This price level is the psychological price that investors dare not cross. Combined with technical analysis: 1.2143 is the strong support of the 240-minute moving average of the euro, the longer the stay and consolidation at this price, the more it shows the support strength of this support level. Moreover, the dollar soared after Saddam's arrest belongs to the results of the news city, and so the news gradually faded by the market, the euro will slowly strengthen, there to fill the gap. As a result, the opening ten minutes, the euro will be at 1.2143 to make a double-bottom pattern, which strengthened the belief of investors in the gap-fill. Throughout the day, the euro was in an attempt to fill the gap. As of midnight on the 16th, the euro had filled the gap left by the gap jump to the 1.2278 high. Using psychoanalysis and combining it with the technical graphics, the winnings on the 15th are supposed to be quite generous.

So, using psychoanalysis grasped two points in this operation.

First, the Saar arrest, belongs to the news market, the news brought by the market is fierce, but as the market fades the news, this market comes and goes quickly, and eventually will certainly fill the gap.

Secondly, under the psychological support of 1.2143, the euro is steadily moving higher step by step. It can be said that 1.2143 is the strong resistance that market doesn't dare to push up(psychological default price). Price that has stopped and consolidated (more technical double-bottom support) is the day of the euro's lowest price, can be bold in this price to hold euro long.

By the above two examples prove that the use of psychoanalysis is very effective, which will bring substantial profits to investor. A combination of fundamental and technical analysis will make decision nearly perfect and bring investors even greater profitability.

In conclusion, psychoanalysis is a new theory, unique in its presentation and profitable. It fills the gap between fundamental and technical analysis and allows better integration of rational and emotional analysis.

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