Nasdaq, Gold and Aussie Dollar on Edge as US Dollar Rockets Higher

With only three days left of the Stage 4 Trading Cup trading contest, we take a look at the most commonly traded markets, to identify trading opportunities to consider for September.

We also run the leaderboard, who has the greatest chance of winning and who is most likely to secure a top 5 competition result.

Let’s kick off the analysis with one of the most volatile instruments in September, the Nasdaq 100 index.

Nasdaq sitting overbought in a downtrend

The Nasdaq has been one of the most volatile instruments in September, hitting a new high on the 2nd of September, only to be sold down heavily for the rest of the month.

As you can see from the chart below, the Nasdaq is currently in a downtrend and overbought, off the back of some impressive buying action which started on Thursday.

Since the huge market sell-off in Feb/Mar this year, the Nasdaq index has been favouring the bulls, with investors preferring the biggest tech companies in the world.

Shares like Amazon, Microsoft, Facebook, Alibaba and Adobe, have all made incredible percentage gains since the lows on the 23rd of March, fuelling the index higher.

But are we starting to see the first signs of a ‘crack’ forming?

The warning signs are there with consistent lower highs, but will we see the recent support level shown below hold?

Volatility will no doubt continue as we head into the last few days of the month, and James Hu, the current leader who focuses on the Nasdaq, will be more than happy about that.

nas100-chart-overbought-28-sept-900.jpg

Mary McNamara, an analyst for ACY Securities and owner of Trade Charting suggests the Nasdaq index is will within a potential Bull Flag.

trade-charting-tweet-28-sept-2020-581.jpg

Gold barely hanging on to support

Gold is testing the patience and resolve of all the precious metal bulls, barely hanging on to support at the end of last week.

But the amount of bullish rhetoric from those long Gold, continues.

Gold Telegraph on Twitter had a fun fact, stating that both Russia and China have been diligently buying up Gold bullion at a fast rate of knots.

gold-telegraph-tweet-28-sept-2020-586.jpg

And we are starting to see more talk about inflation coming back, with famous American investor Stanley Druckenmiller on CNBC last week suggesting he is now worried about inflation for the first time in a long time.

gold-telegraph-tweet-28-sept-2020-704.jpg

And to add more interest to the bullish case for Gold, the Citi global asset allocation team are suggesting to buy the dip in Gold but not stocks.

What does all this mean on the charts?

You can see that Gold was sold off pretty heavily from Monday last week, testing the most recent support levels from Wednesday to Friday.

The run-up in both July and August was impressive, and it makes sense that a lot of bulls would have liked to take a bit of profit off the table.

You may recall our stage 2 Champion, who managed to generate the record gain in a month, who managed to pyramid into Gold for the full month, maximising every possible opportunity available.

Of the two main scenarios (Gold bounces off support or Gold breaks down through support), we are favouring a push back to at least the most recent resistance level shown in the chart below.

Now is the time to hone your Gold trading strategy as we head into the last few days of September, with qualifying opportunities on the line.

gold-daily-chart-descending-triangle-28-sept-900.jpg

The Aussie dollar sees profit-takers step in on US dollar strength

There is no doubt a strengthening US dollar has taken the shine off the recent bullish run on our Aussie dollar. But can the AUD/USD find support here and mount a potential rally?

Sean Callow from Westpac Bank noted here that the Aussie has fallen 3% against the US dollar over the last week, plus fallen against the Eurodollar and British Pound.

Couple that with tensions between China, our largest trading partner, and it is easy to see the speed wobbles come in to play.

Guy Debelle, RBA Deputy Governor, has been more cautious about the outlook for the Australian economy, and there are plenty of reasons to believe that.

Just take a look at the situation in Victoria under the control of Dan Andrews. According to Wikipedia, Victoria accounted for 23.67% of Australia’s share of the national economy.

With many businesses in Victoria now firmly on the back foot, it will be interesting to see what unfolds as we head into the last quarter of 2020.

The Head of Investment Strategy and Chief Economist at AMP Capital, Shane Oliver, has noted that his Australian Economic Activity Tracker is starting to show positive signals.

shane-oliver-tweet-28-sept-2020-588.jpg

On a technical analysis point of view, the Aussie has found support at the current level.

But if we were to see a bounce from here, the dotted brown line could act as the first line of resistance.

As for the big picture, there is a large descending triangle forming.

Like Gold, we would anticipate the potential for a bounce-back up to resistance and perhaps a broader consolidation to occur over the next month or two.

audusd-chart-support-28-sept-900.jpg

Heading into the last few trading days

Casting an eye across the Stage 4 leaderboard, we can see James Hu, the Nasdaq trader, has a firm hold on the top spot.

But nothing in this competition is locked in, especially as we head into the final few days of trading.

We already saw a massive change last week as the leader dropped out of the top ten entirely, allowing James to secure a stronghold on first place.

And we know Yuan Tsui is capable of incredible trading, given his stellar gain in Stage 2 (664%) to claim second place. Click here to listen to his interview.

trading-cup-leaderboard-sept-28-900-v3.jpg

Entry to Stage 5 is now open

With only two qualifying stages left, you will want to make sure you secure your spot in Stage 5 of the 2020 Trading Cup.

Each year we host the Grand Final, which is a prestigious event in an exotic location, that is not to be missed.

Now is the perfect time to test your best trading strategies, combined with your ideal risk management methods, to see if you can secure a position atop the leaderboard.

stage-5-trading-cup-entries-now-open-900.jpg

Are you ready to join the next Stage? Click here to register an account.

Image lost
Ashley Jessen // Author of CFDs Made Simple, Head of Marketing at ACY Securities

Ashley Jessen is the author of CFDs Made Simple and Head of Marketing at ACY Securities. He has been in the financial services industry since the year 2000 and worked for some of the leading companies in the CFD, Forex and Online Trading space.