Forex

Few traders act as purely rational human beings. There is a great deal of
emotional activity in the markets. Most market participants act on the principle
of "monkey see, monkey do." The waves of fear and greed sweep up
bulls and bears.
Markets rise because of greed among buyers and fear among short sellers.
Bulls normally like to buy on the cheap. When they turn very bullish, they
become more concerned with not missing the rally than with getting a cheap
price. A rally continues as long as bulls are greedy enough to meet sellers'
demands.
The sharpness of a rally depends on how traders feel. If buyers feel just a
little stronger than sellers, the market rises slowly. When they feel much
stronger than sellers, the market rises fast. It is the job of a technical analyst
to find when buyers are strong and when they start running out of steam.
Short sellers feel trapped by rising markets, as their profits melt and turn
into losses. When short sellers rush to cover, a rally becomes nearly vertical.
Fear is a stronger emotion than greed, and rallies driven by short covering
are especially sharp.
Markets fall because of greed among bears and fear among bulls.
Normally bears prefer to sell short on rallies, but if they expect to make a lot
of money on a decline, they don't mind shorting on the way down. Fearful
buyers agree to buy only below the market. As long as short sellers are willing
to meet those demands and sell at a bid, the decline continues.
As bulls' profits melt and turn into losses, they panic and sell at almost
any price. They are so eager to get out that they hit the bids under the market.
Markets can fall very fast when hit by panic selling.