Analysis of market sentiment:
- Traders’ confidence has disappeared in assets such as Nasdaq and Bitcoin but this may still turn out to be just a correction after their recent gains.
- In that case, market sentiment may improve and lead to a resumption of the latest trend higher.
The trader’s confidence decreases
Traders have begun selling the assets that have increased in recent weeks, such as the Nasdaq index for US technology stocks and cryptocurrencies such as Bitcoin. However, the economic background is still positive, with a recovery from the downturn caused by the coronavirus pandemic still on track thanks to successful Covid-19 vaccination programs in the US, UK and elsewhere.
This suggests that the current decline in assets such as Nasdaq may simply be a correction and that their prices will rise again when it is over.
Nasdaq price chart, daily time frame (March 11, 2020 – February 23, 2021)
Diagram of IG (You can click on it for a larger image)
In this webinar, I looked at the trends in the major currency, commodity and stock markets, on forward-looking data on financial calendar this week, at IG Client Sentiment page on DailyFX websiteand at IG Client Sentiment reports accompanying it. You may also want to check out DailyFX Trade in global markets decoded podcasts.
— Written by Martin Essex, analyst and editor
Feel free to contact me on Twitter @MartinSEssex
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