In Forex Market, paradigm shift can determine the direction of the market. The fundamental of a country's economic will give strong impact to the market. However, fundamentalists have their own judgement and argument on the economy. It often conflict each other.
After Lehman Brothers (http://www.lehman.com/) trigged the worst financial crisis in the world, all kind of 'gurus' give their opinions and assumptions on the outlook of the economy. You name it, all type of shapes; (W, V & U).
When the paradigm shift, so do the forex market direction. Speculation on the the economy recovery push up USD/JPY, interest rate become the 'big topics' for the traders. However, when Fed say the economy is still fragile and economy is not in 'inflation' for the near future, the paradigm shift again.
To trade Forex effectively(I mean making money consistently), I prefer taking psychology aspect that affect the paradigm shift. Forex market unlike stock market that allow you to see the company financial statement, but you need to read the country financial statement. Ironically, USA has the worst financial statement in the world but USD is still doing well recently.
When paradigm shift, Big Boys have their own agenda to deter the market direction. If you look at psychology aspect, some big boys who miss the train will 'twist' their previous views and support the current trend! Some who used to support EURO now talking differently. I guess their paradigm have shifted along with their new positions in EURO!!! This is the financial world.
