@meriel

The Fear & Greed Index is widely referenced as a sentiment gauge, but its significance should be seen as complementary rather than decisive. In extreme fear, the index often signals capitulation, which historically aligns with buying opportunities. Conversely, extreme greed suggests overheated markets vulnerable to corrections. However, the index aggregates data like volatility, trading volume, social media trends, and dominance, meaning it may lag sudden market shifts. Traders use it to identify sentiment extremes rather than daily trading signals. While not a predictive tool, its value lies in measuring collective psychology, helping investors avoid herd behavior during emotional peaks.

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