FGIC exits its extreme greed zone

Please follow these links: original and update explanations how the Fear & Greed Composite Index (FGIC) works.

CNN FGI in the four different timeframes
CNN Fear&Greed Index in the four different timeframes

All four Fear/Greed timeframes which I combine into the FGIC index have been diverging from price for some time. When it comes to divergences, the weekly appears to be the most useful timeframe. All timeframes have left their extreme greed zones, turning to “positive,” while the fastest daily is already neutral.

The Composite Fear & Greed Index
The Composite Fear & Greed Index

The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when FGIC is +8 or higher (Extreme Greed).

After tracing a double top in extreme readings FGIC has also exited its extreme greed zone and is back in its positive zone. In the past, an exit from the extreme greed zone after a double top (marked with a “2”), very often led to a correction which tended to send FGIC down to extreme fear readings.

(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)