Market Mantra: Cryptocurrency correction we ought to have

What a change one week can bring.
The Cryptocurrencies came crashing down after a crackdown in China. The correction was much needed as unlimited growth is never sustainable. Bitcoin, altcoins all suffered right through the week.

Last week we talked about how Bitcoin is finding it hard to break back above USD 50,000, the bears finally took control as China banned cryptocurrencies resulting n it falling to as low as $30,000.00 at one time. Etherium was the worst to suffer however as other altcoins followed suit.

The short and medium-term trend for Bitcoin is now firmly down, the long term trend however is still up. Having said that Bitcoin may find it hard to bounce back if it does not recover to USD 44,000,00 soon.

Bitcoin: Picture Source; @Canva

In other financial markets, Australia had a minute gain during the week ending the week 0.23% higher. We saw Commonwealth Bank flattening out, as people decided to buy technology stocks at a bargain. We still think that this week there will be a bit of pressure on technology stocks and wouldn’t be surprised if they get dumped and investors rush back from Technology stocks such as Afterpay and Zippay to commodity and financial stocks again during mid-week.

Weak iron ore prices weighed in on BHP and RIO which shed about 1%. With Iron ore prices
shedding another 2% on Friday we expect the prices in BHP and Rio to come under some pressure this week. Falling oil prices may impact energy stocks too.

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All in all, as mentioned above commodity and financial stocks are where we see investors heading towards this week.

Australian Dollar: Picture Source; @Canva

Australian dollar which is highly correlated to prices of Gold and Iron saw retreating 0.5% on Friday as commodity prices took a hit. Falling iron ore prices, retreating Copper prices on China price crackdown fears all weighing in on the Australian Dollar. It will be testing support around 0.7710 and 0.7690 against the US Dollar this week.

The Australian Dollar as mentioned last week continued its decline against the Indian Rupee too last week. Currently, 1 AUD is buying around INR 56.36, we expect the weakness to continue this week as Corona numbers in India improve and commodity prices reduce. There is however major support around Rs 55.50 and the dollar may bounce back from there.

Author: Ateev Dang is a trader and trading coach by profession. He runs his own business Glow trades Pty Ltd. Here, he teaches anyone who is interested in starting on their trading journey how to trade. He can be contacted at adang@glowtrades.com.au.

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