News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

Daniel Dubrovsky, Strategist

S&P 500, AUD/USD, EUR/USD, Trader Positioning - Talking Points

  • S&P 500 could run into fading upside momentum ahead
  • IG Client Sentiment hints that AUD/USD may turn lower
  • EUR/USD at risk to a reversal as prices test key resistance

In this week’s session on IG Client Sentiment (IGCS), I discussed the outlook for the Dow Jones and S&P 500 while also outlining the trajectory for the Australian Dollar and Euro. IGCS is typically viewed as a contrarian indicator. For a more detailed overview that branches into fundamental analysis, check out the recording above.

S&P 500 Sentiment Outlook - Mixed

The IG Client Sentiment (IGCS) implies that 25.93 percent of S&P 500 traders are net long. Upside exposure has increased by 3.82% compared to yesterday, while overall being down by 16.24% versus last week. Meanwhile, net short bets have declined by 7.80% and 0.35% over a daily and weekly period respectively. The combination of current sentiment and recent changes offers a further mixedtrading bias.

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

S&P 500 Technical Analysis

The S&P 500 is fast-approaching highs from June, making for a critical barrier of resistance between 3213 and 3231. This follows a bounce off the 20-day simple moving average (SMA) – green line on the daily chart below. Should prices push to new highs ahead, keep a close eye on RSI. Negative divergence could emerge, implying fading upside momentum which can at times precede a turn lower.

S&P 500 Futures - Daily Chart

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

Dow Jones Chart Created in Trading View

AUD/USD Sentiment Outlook - Bearish

The IGCS gauge implies that 32.26% of retail traders are net long AUD/USD. Upside exposure has climbed by 12.69% and 7.24% over a daily and weekly period respectively. Recent changes in sentiment warn that the currentprice trend may soon reverse lower despite the fact traders remain netshort. From a psychological perspective, that could speak to a rising share of investors attempting to pick the next bottom in the Aussie.

Develop the discipline and objectivity you need to improve your approach to trading consistently

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

Australian Dollar Technical Analysis

AUD/USD is ascending into the key resistance range between 0.7015 to 0.7064. This area consists of highs from the beginning of this year and last month. Similar to the S&P 500, recent gains have followed a bounce off the 20-day SMA. Here too negative RSI divergence risks emerging in the event the Aussie sets new highs ahead. A turn lower places the focus on key support between 0.6777 – 0.6840.

AUD/USD - Daily Chart

AUD/USD Daily Chart

AUD/USD Chart Created in Trading View

EUR/USD Sentiment Outlook - Bullish

The IGCS gauge implies that 25.50% of retail investors are net long EUR/USD, the least since June 15 when the pair traded around 1.1300. Downside exposure has increased by 11.29% and 29.84% over a daily and weekly basis respectively. Traders are further netshort than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger bullish contrarian trading bias.

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

Euro Technical Analysis

EUR/USD could be at risk to a turn lower after prices pushed above highs from June but RSI did not follow. This has left behind negative RSI divergence, a sign of fading upside momentum. Should prices reverse course from here, the 20-day SMA could stand in the way as support. Otherwise, further gains from here would place the focus in key resistance which is a range between 1.1446 – 1.1496.

EUR/USD – Daily Chart

S&P 500, AUD/USD, EUR/USD Outlook: Signals in Trader Positioning

EUR/USD Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from July 15 Report

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES