Although asset prices depend primarily on fundamental and technical factors, they can also be influenced by market sentiment. In fact, markets are largely driven by emotion, and sentiment can be reflected in prices.
For example, the market reacted nervously to a Donald Trump victory in the 2016 US presidential election. While most polls predicted a Hillary Clinton victory, markets went into a state of shock when Trump emerged as the winner. A nervous reaction led to a sell-off of the US dollar and US indices, but as soon as the nerves calmed down, traders started buying the greenback and stocks. Why? Because Trump's policy was seen as a positive thing for the US economy. However, the first reaction was mainly determined by sentiment, not fundamental factors. That's why it's important to take sentiment into account when trading and to know which indicators could be useful in this area.
