How does the market think? Why does the market think in this way? How do market participants make decisions? These are central questions when analysing the mood, the sentiment of financial markets. In this essay, I present a stochastic model, which is adapted to the analysis of sentiment on foreign exchange markets. Actual references are made to the EUR/USD exchange rate. Turning points might be easier to forecast by extracting information from sentiment analysis and combining this information with classical fundamental tools.
