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Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Daniel Dubrovsky, Strategist

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

  • Retail trader bets hint S&P 500 may fall, will Dow follow?
  • AUD/USD signal appears bullish, but technicals seem bleak
  • Check out the webinar recording for breakdown of IGCS
How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Daniel Dubrovsky
How is IG Client Sentiment a contrarian indicator?
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In this week’s webinar, I covered the outlook for the Dow Jones, S&P 500 and pro-risk Australian Dollar using IG Client Sentiment (IGCS), a tool gauging retail trader positioning. It is typically a contrarian indicator. For further analysis of where these assets may go, including coverage of fundamentals, check out the recording of the session above.

Dow Jones Sentiment Outlook - Mixed

The IGCS gauge implies that about 31% of retail traders are net long the Dow Jones. Upside exposure increased by 15.41% compared to yesterday while decreasing almost 6% from a week ago. The fact that traders are mostly net short the Dow suggests prices may continue rising. But, the combination of current sentiment and recent changes offers a mixed outlook.

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Technical Analysis

Dow Jones futures are struggling to push above the March 18th high at 33116, but the dominant uptrend seems to be being maintained by rising support from a year ago. Negative RSI divergence does show that upside momentum is fading which can at times precede a turn lower. Otherwise, extending gains expose the 78.6% Fibonacci extension at 33666.

Dow Jones Futures Daily Chart

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Chart Created in Trading View

S&P 500 Sentiment Outlook - Bearish

The IGCS gauge implies that about 43% of retail investors are net long the S&P 500. Upside exposure has increased by 2.63% and 0.13% compared to yesterday and last week respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Technical Analysis

S&P 500 futures have been idling within the key 3928 – 3978 resistance zone. The dominant uptrend appears to be being maintained via rising support from March 2020. Negative RSI divergence does warn that turn lower could be in store ahead. Otherwise, resuming gains expose the 61.8% Fibonacci extension at 4067.

Top Trading Opportunities in 2021
Top Trading Opportunities in 2021
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What are the top trading opportunities in 2021?
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S&P 500 Futures Daily Chart

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

S&P 500 Chart Created in Trading View

Australian Dollar Sentiment Outlook - Bullish

The IGCS gauge implies that roughly 51% of retail traders are net long AUD/USD. Upside exposure has decreased by 8.99% and 4.74% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse higher despite the fact traders remain netlong.

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Technical Analysis

From a technical standpoint, the Australian Dollar could be vulnerable to extending February’s top. AUD/USD appears to have formed a bearish Head and Shoulders chart pattern. A breach under the 0.7564 – 0.7622 neckline range, as well as the 100-day Simple Moving Average, would expose the 0.7343 – 0.7413 inflection zone.

AUD/USD Daily Chart

Dow Jones, S&P 500, AUD/USD Outlook: Retail Trader Positioning Bets, Technical Analysis

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from March 31st Report

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

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

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