To know what the crowd of market participants thinks is not easy, but understanding the crowd is still very simple, understanding the thoughts of each individual participating in the market. The crowd acted irrationally and repeated it again and again.

The key to capturing the psychology of the crowd is understanding that repetition, finding the most important "highlight". For many traders, the trend is the first basic factor to make a buy-sell decision than whether you are the following trader trend (trend trader) or counter-trend trader (trading against the trend).

Understand crowd psychology due to the concept of a trend based on the idea that the longer the market trend follows the same trend, the higher the probability that the trend will follow in the future. For example, if EURUSD has formed a downtrend for 2 years, the possibility of EURUSD falling next year is very high. Because the crowd believes that EURUSD is likely to continue to decline (you can explain it is due to economic factors, politics ... but in general it is still the crowd expected for the market).

The longer the market is trending, the higher the number of traders placing orders with the same trend. Expecting crowds to grow gradually helps to gradually increase the rate of previous trending trends. And also the increasing number of traders makes the pressure of the trending higher and higher, the price will fall further or increase stronger.

Every price movement at any time frame forms a trend

We move on to the 2nd concept of the market crowd by comparing the 2 charts below.

If you notice, both charts are on the same time frame but were captured in 2 different timeframes. The first chart is H1, the chart below is on the M5 frame.

Chart H1 is a clear downtrend, but to the M5 chart, the downtrend is not clear and we can only observe fully when the zoom chart is very small for an overview. Compare these 2 charts to show you what the problem? For traders on large timeframes, a pullback can also be a huge trend for traders trading on small timeframes. All trading-related issues revolve around the story of trends, trends are present in all timeframes, and based on trend or short or long price recovery sessions we can know how many traders are trading. translation, in other words, "thinking the market is following the direction they thought".

Each price recovery phase, each swing price swing when we understand the focus of many traders thinks. Measuring a swing price swing (pullback or projection) can help us measure the strength of the trend.

Compare swing prices

In the chart above, you will see a total of 3 times the price forming upswing (pullback up) on a large downtrend. Phase 2 and 3 have the same length (55 candles), while phase 1 has only 9 candles. Phase 2 and 3 make prices go better because it causes many traders to place a lot of buy orders, these same traders are trapped when the big boy wants to manipulate the market and "push" the market to follow the old trend. And to be careful, phase 2 can be considered stronger than phase 3 because the price has a big change (trap more buy traders compared to phase 3).