The trade: Bitcoin’s drop and Nvidia’s earnings drive market uncertainty

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This video was created on 28 August for IG audiences by ausbiz.

Nasdaq and Nvidia face critical moments

IG's Tony Sycamore discusses the high expectations surrounding Nvidia's upcoming earnings report. The market remains optimistic, though not as heavily positioned as earlier in the month. Sycamore cautions that while a strong performance is expected, there is a risk of disappointment. The Nasdaq has rebounded from early August lows but is now facing resistance at significant technical levels, including the 200-day moving average.

Federal Reserve Chair Powell's recent comments have reinforced the possibility of interest rate cuts, which theoretically support further gains for the Nasdaq. However, with September historically being a weak month - averaging a 4.2% decline in the S&P 500 - Nvidia’s earnings could be a critical factor in determining the market’s direction.

Bitcoin's surprising drop

Bitcoin recently experienced its most significant drop since early August, despite earlier gains that pushed it above key technical levels like the 200-day moving average and the 65,000 mark. However, it has since fallen below 60,000, raising concerns. Sycamore notes that the next 24 hours are crucial, as Nvidia’s earnings could potentially spark a rebound, but the current decline has introduced uncertainty.

Oil market: continuing gains with key resistance levels

Oil prices have seen a strong rally, reaching 77.50, just below the 200-day moving average. Despite a slight pullback, Sycamore remains optimistic, viewing the dip as a brief pause before further gains. Key levels to monitor include 71.40 on the downside, which could signal further declines, and the 200-day moving average on the upside, where a breakout could push prices above $80.

Aussie dollar strengthens ahead of inflation data

The Australian dollar is holding firm around 67.98 ahead of key inflation data. Even with expectations of a mechanical step down in inflation due to energy rebates and the potential for rate cuts, the currency remains strong.

Sycamore suggests that if the Aussie dollar can break above 68, it could advance towards 69.50, with trendline resistance from late December acting as a key target.

ASX 200's potential test of all-time highs amid rebalancing

The ASX 200 started the week strong, aiming for the all-time high of 8148. However, a more cautious tone has developed as rebalancing flows may push the market in both directions. As the month-end approaches, Sycamore advises caution, especially given the statistical challenges of September and the significant rally earlier in the week. Despite this, there is still potential for the index to test its all-time highs in the short term.