It is easy to look back at market cycles and recognize how the overall psychology changed. Analyzing previous data makes it obvious what actions and decisions would have been the most profitable.
However, it is much harder to understand how the market is changing as it goes - and even harder to predict what comes next. Many investors use technical analysis (TA) to attempt to anticipate where the market is likely to go.
In a sense, we may say that TA indicators are tools that may be used when trying to measure the psychological state of the market. For instance, the Relative Strength Index (RSI) indicator may suggest when an asset is overbought due to a strong positive market sentiment (e.g., excessive greed).
The MACD is another example of an indicator that may be used to spot the different psychological stages of a market cycle. In short, the relation between its lines may indicate when market momentum is changing (e.g., buying force is getting weaker).