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S&P 500, Dow Jones, AUD/USD Forecast: Retail Trading Signals Analyzed

S&P 500, Dow Jones, AUD/USD Forecast: Retail Trading Signals Analyzed

Daniel Dubrovsky, Strategist

S&P 500, Dow Jones, AUD/USD, Technical Analysis, Retail Trader Positioning - Talking Points

  • Retail signals hint the S&P 500 and Dow Jones may rise ahead
  • This follows bounces from rising support from late-March 2020
  • AUD/USD risks extending losses, keep eyes on the 50-day SMA
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In this week’s session on IG Client Sentiment (IGCS), I discussed the outlook for the S&P 500, Dow Jones and Australian Dollar. IGCS is typically a contrarian indicator. For further analysis of where these may go, alongside commentary on the Euro and New Zealand Dollar, check out the recording above.

S&P 500 Sentiment Outlook - Bullish

The IGCS gauge implies that roughly 34% of retail investors are net long the S&P 500. Upside exposure has decreased by 14.70% and 2.38% 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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S&P 500 Sentiment Outlook - Bullish

S&P 500 Technical Analysis

S&P 500 futures bounced off long-term rising support going back to late March. While this has maintained the dominant upside bias, a period of consolidation may be ahead as prices test the 3824 – 3862 resistance zone. Keep a close eye on RSI, diverging momentum risks preceding another turn lower.

S&P 500 Futures Daily Chart

S&P 500 Futures Daily Chart

S&P 500 Chart Created in Trading View

Dow Jones Sentiment Outlook - Bullish

The IGCS gauge implies that roughly 31% of retail traders are net long the Dow Jones. Upside exposure has decreased by 30.89% and 8.96% 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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Dow Jones Sentiment Outlook - Bullish

Dow Jones Technical Analysis

Dow Jones futures have also bounced off rising support from late March. Before that however, prices broke under a bearish Rising Wedge chart pattern with some degree of follow-through. Overturning the downside signal from the wedge entails uptrend resumption, pushing above resistance at 31188.

Dow Jones Futures Daily Chart

Dow Jones Futures Daily Chart

Dow Jones Chart Created in Trading View

Australian Dollar Sentiment Outlook - Bearish

The IGCS gauge implies that roughly 49.32% of retail investors are net long AUD/USD. Upside exposure has increased by 3.66% and 20.91% 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 net short.

Australian Dollar Sentiment Outlook - Bearish

Australian Dollar Technical Analysis

Recent losses in AUD/USD have brought the pair to test the 50-day Simple Moving Averaged (SMA). This follows a break under the 20-day one. If the former breaks, the Aussie risks extending losses towards the 0.7343 – 0.7413 inflection zone. Guiding the pair lower appears to be a falling trendline from early January.

AUD/USD Daily Chart

AUD/USD Daily Chart

AUD/USD Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from February 2nd 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.

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