Week Ahead Analysis: Gold, British Pound and the S&P500 the Ones to Watch

The October Stage 5 Trading Contest is off to another flying start with September's champion continuing his fine form to lead the way.

James Hu is sitting atop the leaderboard on 53.72%, with a strong contingent of talent nipping at his heels.

It is great to see so many new names on the leaderboard, as more and more people test their trading systems in a live environment.

Having said that, it is pleasing to see so many current champions backing up their outstanding performance month after month.

Let's take a look at the leaderboard after the first few days of October.


Gold on the cusp of a potential breakout

When Trump announced he tested positive for Covid-19, the upswing in the price of Gold was impressive, to say the least. Within a few hours, Gold had rallied around $15.

Gold prices closed last week out at a 2-week high, as the US dollar was sold down heavily on Friday.

What will be keeping traders on edge at the start of this week is that Gold is sitting on resistance, while the US dollar is sitting on support.

Further to this, we see a larger descending triangle pattern forming on Gold, as shown below.

On a short-term basis, bulls will be cautious with Gold sitting on resistance and overbought.

Traders will be keeping a close eye on the potential for a pullback to support, which could give further weight to the bullish possibility if Gold does pull back to the $1,860 level.


It is interesting to see the price of Gold on Tuesday morning pushing higher, even after Trump announced he has returned to the White House.


The British Pound rallies 300 pips in 8 days

One of the most aggressive rallies across the FX Majors has been the GBPUSD pair.

Since the low on the 23rd of September, in combination with some bullish divergence, we've seen over 300 pips of gains on the GBPUSD pair.

We tweeted about the bullish divergence signal back on the 24th of September as per the tweet below.


With the Pound surging over the last two weeks and momentum on the side of the bulls, it will be interesting if we start to see a break above resistance.

The chart below shows the current price action.


There is a strong possibility for a break of resistance, especially since the US dollar had a strong pullback overnight.

With Brexit negotiations intensifying over the coming weeks, as reported by PoundSterlingLive, it will be interesting to see if positive talks can continue without any tensions showing.

With a raft of positive talk on the Pound and uncertainty around the US dollar, this will be one market that Trading Cup traders will be watching closely.

S&P500 potentially hitting a lower high

Despite Friday's small hiccup when President Trump announced his positive test, the S&P500 has since rebounded strongly, sitting on resistance.


But this resistance point could be the second lower high, following the small rally that ended on the 16th of September.

Where is all this buying coming from? Is it purely stimulus money?

Holger Zschaepitz could be suggesting that from his tweet below, which is suggesting insiders have been selling hundreds of millions of dollars in shares whilst purchasing hardly any.


It's hard to read into what that could mean, and we are not ones to speculate on shared analysis.

But it is an exciting area to watch as we head into the November 6 US Presidential Election.

What is the smart money doing?

Will we see continued buying from the Fed?

At the end of June, CNBC reported that the Fed is buying some of the biggest companies' bonds.

We will need to watch this space closely and monitor any hint of weakness from the key players on Wall Street.

As a competitor in the Trading Cup, keep your eyes on the news flow to provide any hint of further selling pressure, which could see any of the big markets tumble from recent historic highs.

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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.