S&P 500, Crude Oil, AUD/USD, Trader Positioning – Talking Points
In this week’s session on IG Client Sentiment (IGCS), I discussed the outlook for the S&P 500, crude oil prices 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.
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S&P 500 Sentiment Outlook – Bearish
The IGCS gauge implies that about 26% of retail investors are net long the S&P 500. Exposure to the upside has increased by 17.20% and 9.77% 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.
S&P 500 Technical Analysis
S&P 500 futures recently closed at an all-time high, stopping short of the midpoint of the Fibonacci extension at 3452. Guiding the S&P 500 higher appears to be rising support from March’s bottom, red parallel lines on the daily chart below. A breakout under rising support could open the door to a reversal towards 3337.
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S&P 500 Futures – Daily Chart
S&P 500 Chart Created in Trading View
Crude Oil Sentiment Outlook – Bullish
The IGCS gauge implies that about 45% of retail investors are net long crude oil. Net short bets have increased by 27.17% and 10.41% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias.
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Crude Oil Technical Analysis
WTI crude oil prices are pushing deeper into the key 42.91 – 43.87 inflection zone. A breakout to the upside would expose lows from January around 49.42 which could act as new resistance. Key support sit below as a combination of the 20-day and 50-day Simple Moving Averages (SMAs).
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WTI Crude Oil – Daily Chart
Crude Oil Chart Created in Trading View
Australian Dollar Sentiment Outlook – Bearish
The IGCS gauge implies that roughly 45% of retail traders are net long AUD/USD. Upside exposure has increased by 5.20% and 30.24% over a daily and weekly basis respectively. From here, recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain net-short.
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Australian Dollar Technical Analysis
The 20-day SMA continues to maintain the focus to the upside for AUD/USD. Below sits the 0.7109 – 0.7140 support zone which if taken out, exposes the 50-day SMA. Uptrend resumption entails clearing peaks from 2019 which could make for z range of resistance between 0.7273 and 0.7295.
AUD/USD – Daily Chart
AUD/USD Chart Created in Trading View
*IG Client Sentiment Charts and Positioning Data Used from August 25th Report
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter