Dow Jones, S&P 500, AUD/USD, Trader Positioning – Talking Points
- Dow Jones, S&P 500, AUD/USD may fall as long bets increase
- What are some key technical levels to watch for in the near term?
In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for the Dow Jones, S&P 500 and AUD/USD. IGCS is a contrarian indicator. For a deeper dive into what this means and for fundamental analysis, check out the recording of the session above where I also outlined the road ahead for GBP/USD starting around the 31-minute mark.
Dow Jones Sentiment Outlook – Bearish
The IGCS gauge implies that about 38% of retail traders are net long the Dow Jones. Upside exposure has increased by 1.73% and 32.15% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.
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Dow Jones Futures Technical Analysis
Dow Jones futures could be readying for the next leg lower in the near term. That is because the Dow has taken out short-term rising support from the middle of September. However, confirmation is lacking. A further close under the 28084 inflection point could open the door to testing rising support from June.
Dow Jones Futures – Daily Chart
Dow Jones Chart Created in Trading View
S&P 500 Sentiment Outlook – Bearish
The IGCS gauge implies that roughly 41% of retail investors are net long the S&P 500. Downside exposure has decreased by 3.19% and 16.18% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.
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Oct 28
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S&P 500 Technical Analysis
S&P 500 futures may also be at risk to a turn lower in the near term. Recently, the S&P closed under a short-term rising trendline from the middle of September. However, confirmation of the breakout is somewhat lacking. A push through the October 19th close could open the door to testing rising support from June.
S&P 500 Futures – Daily Chart
S&P 500 Chart Created in Trading View
Australian Dollar Sentiment Outlook – Bearish
The IGCS gauge implies that about 58% of retail traders are net long AUD/USD. Upside exposure has increased by 8.11% and 35.77% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bearish contrarian trading bias.
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Australian Dollar Technical Analysis
AUD/USD is facing its next key technical zone as it attempts to resume the top from late August. Prices confirmed a breakout under a Symmetrical Triangle earlier this month after a bearish ‘Death Cross’. This has brought the Aussie down to the 0.7015 – 0.7064 inflection zone. A close under it exposes lows from June.
AUD/USD – Daily Chart
Australian Dollar Chart Created in Trading View
*IG Client Sentiment Charts and Positioning Data Used from October 21st Report
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
