Market sentiment indicators, like the Fear and Greed Index, reflect market trends by gauging investor emotions. The index ranges from 0 (extreme fear) to 100 (extreme greed), based on factors such as stock price momentum, volatility, and trading volume. When fear dominates, investors sell off assets, driving prices down and signaling a bearish trend. Conversely, greed pushes buying activity, inflating prices and indicating a bullish trend. For example, a low index reading might suggest oversold conditions, hinting at a potential rebound, while a high reading could warn of an overbought market nearing a correction. By quantifying emotional extremes, the Fear and Greed Index helps traders anticipate shifts, though it’s not a standalone predictor—combining it with technical and fundamental analysis offers a clearer picture of market direction.