Traders Insight Magazine [August 2020]

BRINGING YOU MARKET ANALYSIS FROM OUR TRADERS

ONE OF THE WORST MONTHS FOR THE US DOLLAR IN YEARS Read more, p. 5

EXCLUSIVE: EURO EXTENDS AND GOLD GLITTERS

TRADER OF THE MONTH

NOITIDE 0202 TSUGUAJ

TRADER'S INSIGHT

FEATURED ARTICLES PAGES 5: Market Overview PAGES 8-11: My Journey as a Prop Trader PAGES 15-19: Cross market technical and fundamental analysis

THIS MONTHS CONTRIBUTORS GAVIN PANNU: HEAD OF TRADING ACADEMY

Gavin is an experienced trader of a multi strategy fund. He is a certified market technician with both the STA and IFTA organisation and has worked with trading companies and brokers as a Senior Market Analyst and Mentor. He has been a regular contributor to financial publications.

DESMOND: TRADER & MENTOR

Junior FX Trader at Alphachain Capital with a Mathematics and Economics (BSc) degree. Possesses a strong focus in technical analysis and prefers to trade in line with the fundamental theme.

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MARKET OVERVIEW: ONE OF THE WORST MONTHS FOR THE US DOLLAR IN YEARS GAVIN PANNU The month of July was a tumultuous time for the USD after extreme selling led to one of the worst months for the US Dollar in years. The DXY fell by over 4% as the greenback battled with pressure from Covid-19 and US – China relations. The slump in the dollar led to risk assets rising with cable moving to 4-month highs as price broke above 1.3000.

With Covid-19 cases surpassing 18mln worldwide and infections increasing at a rate of 1mln every four days some nations have had to take precautionary measures and reinstate lockdowns at a local level. PM Johnson and the UK government are said to be drawing up plans to avert another nationwide lockdown. The plans are likely to involve asking people over the age of 50 to stay at home if the current restrictions are unsuccessful in keeping a 2nd wave at bay. Australia’s state of Victoria declared a state of emergency and announced that the capital Melbourne will be subject to tougher restraints.

US President Trump reiterated that he may ban TikTok based on national security grounds.

President Trump has given Bytedance.LTD 45 days to agree a sale with Microsoft. White House Chief of Staff Meadows stated that there is still a long way to go in the Coronavirus relief negotiations and remains overly pessimistic on the possibility of reaching a long-term deal soon.

WTI Crude Oil has broken down after its attempt to hold around the $42.50/bbl level.

Bearish pressure re-entered the market and price broke below $40 as relations between the US and China hang in the balance and rising Covid-19 cases prompt further lockdowns across the globe. At the time of writing price is trading at $39.75 with nearby support around $38.70. Gold continued its push higher though found resistance at $1,980/oz. The strong bullish move has somewhat slowed in the past week as traders and financiers eye the $2,000 mark.

In the cryptocurrency space, BTCUSD experienced a surge of bullish pressure as price broke $12,000 for the first time since August 2019. The bullish move was followed with a strong spike lower as the Cryptoasset plummeted over 13% before finding support around $10,955. With BTCUSD now trading comfortably above the $10,000 investors and financiers will begin to keep a close eye on the cryptocurrency as it begins to trade in the 5figure range. Price firmly sits above the 21,50 and 200 moving average as the asset gives a strong bullish tone. Ethereum moved in tandem with the first cryptocurrency as price broke above $400 before snapping below. With Ethereum breaking out of a long-term bearish channel, the outlook for the asset now shifts to the upside.

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Trader of the month Top 3 Performing Traders of July, 2020

1. Sami: 2.66% 2. Jerome: 0.85% 3. Rudolf: 0.66%

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US DOLLAR DECLINES, EURO EXTENDS AND GOLD GLITTERS DESMOND The month of July brought further volatility for EURUSD as the pair moved to print fresh highs for the year amidst the global pandemic. The EUR was the top performer for the month as the currency gained over 4% on the greenback and financial markets experienced an abundance of dollar weakness.

Whilst both continents still grapple with the global pandemic, it is becoming clearer that one continent has been handling the virus much more efficiently than the other. The DXY tumbling to lowest levels since 2018 marks a dire time for the USD as it appears to be losing its crown in a time which has been afflicted with uncertainty. The states of Florida and California still appear to be battling with Covid-19 as cases and deaths show no signs of abating.

The agreement of the EU recovery deal also helped boost the bloc’s currency. A pledge of €750bln was made to reconstruct the regions pandemic-plagued economies after talks lasted for over four days. This new agreement will enable Brussels to disperse billions of Euros in support to its member states.

The deal outlines that €390bln will be distributed in the form of grants whilst the remaining €360bln will utilised in the form of loans. This news provided some stability for the Eurozone as they look to forge ahead and invoke a sense of confidence within their neighbouring states.

Quantitative figures from the US last month reported the largest contraction on record for the world’s largest economy after a reading of 32.9% was recorded last Thursday. It doesn’t bode well for a nation which has been deploying a variety of fiscal and monetary stimulus measures in order to absorb and minimise the economic shock that has been dealt by the virus.

The FED had little to report in the most recent FOMC press conference as Jerome Powell once again reiterated his commitment to doing all ‘it takes’ to ensure a strong economic recovery. Whilst the rate was maintained as expected, investors and financiers were keen to find out whether any further increases to asset purchases would be considered though the FED defended their stance on this and outlined that the current pace of bond buying will be upheld.

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The weakening of the worlds reserve currency is not all doom and gloom as it poses as a benefit to developing countries and emerging market players who as a result will be able to service their US denominated debt at a cheaper rate. In addition to this a subdued dollar is set to make exports much more competitive and assist US Multinational companies by making it cheaper for them to convert large amounts of profit back into their home currency which in turn could lead to a rally in US stocks. Though it should be noted that the USD weakness is unlikely to trickle into and effect change within the manufacturing sector for at least another year; this won’t mean much to President Trump who has in the past mentioned that the currency’s rally has hindered manufacturers chances of progressing as his focus turns to his re-election campaign this November.

Lastly, Gold took centre stage during the month of July as the bearish USD outlook spurred risk flows into the commodity. XAUUSD broke to new all-time highs as investor demand grew and the run up to the $2,000 mark intensified. As interest rates around the world remain extremely low, the purchase and physical holding of the commodity becomes much more attractive. At the time of the writing gold sits around $1,975/oz having gained over 12% within the month of July alone. The big figure of $2,000 is now firmly in sight and many major banks have already adjusted their forecast for the next year. Most notably Goldman Sachs who have outlined that they see Gold and Silver increasing to $2,300 and $30/oz respectively within the next 12 months.

Technical Outlook

EURUSD

The EURUSD broke above its 2020 high and pressed up into 1.1900, price has broken above the 200SMA whilst the 21EMA snaping above the 50EMA adds to the current bullish tone seen in this pair. With price now at a daily level of resistance (1.1815), we can expect a pullback on EURUSD, though if price violates this level then a further bullish move up is in sight with key psychological levels needing to be broken.

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XAUUSD Â XAUUSD is still very much maintaining its 2-year bullish run. With the commodity currently being in new territory and overbought, we may see some exhaustion before price extends higher into $2,000/oz.

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ABOUT ALPHACHAIN Alphachain Capital is a proprietary trading firm founded with a vision of combining strategy, innovation and technology to succeed in today’s global markets. Alphachain Academy focuses on the development of our new traders for our prop firm. For aspiring and novice traders, the Alphachain Academy's programmes have been designed to develop, select and grow a new generation of talented prop traders from a variety of backgrounds who wish to trade cryptocurrency or FX markets. For established traders we offer state of the art infrastructure, investment capital and a collaborative trading environment nurturing success.

Web: https://www.alphachain.academy/ Phone: +44 20 7097 1715 Email: info@alphachain.co.uk Office: 25 Clarendon Road, Redhill, Surrey, RH1 1QZ Disclaimer: Trading in any financial products whether with or without margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. All information in this publication is for education only and should not be seen as advice or a trading signal.