Jump to content

Gold Prices, Dow Jones May Rise if Retail Traders Add Onto Downside Exposure


Recommended Posts

GOLD, XAU/USD, DOW JONES, TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING - TALKING POINTS

  • Retail traders increasing downside exposure in gold, Dow Jones
  • As a contrarian signal, this could be a sign of a rosy path ahead
  • XAU/USD and Dow Jones near-term uptrends remain intact
Gold Prices Up Within a Rising Channel, but Is the Next XAU/USD Move Lower?

Taking a look at IG Client Sentiment (IGCS), retail traders have been increasingly betting that gold prices and the Dow Jones may fall ahead. In other words, net-long exposure in these assets is on the decline. IGCS can at times be a contrarian indicator. With that in mind, if this trend in positioning continues, gold and the Dow Jones could rise in the coming days.

GOLD SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that about 73% of retail traders are net-long gold. Since most traders are still biased to the upside, XAU/USD could fall. However, downside exposure has increased by 48.65% and 29.27% compared to a day and a week ago respectively. With that in mind, the combination of overall and recent changes in positioning offers a bullish-contrarian trading bias.

Gold Prices, Dow Jones May Rise if Retail Traders Add Onto Downside Exposure

TECHNICAL ANALYSIS

A rising range of support from August continues to offer an upside technical bias for gold. Broadly speaking, however, the yellow metal remains unchanged from price levels seen in July 2020. Immediate resistance appears to be the 1827 – 1834 inflection zone, which stands in the way from reaching the November high at 1877. Breaking under the trendline exposes the December low, which is closely aligned with the 61.8% Fibonacci retracement at 1756.

 

XAU/USD DAILY CHART

Gold Prices, Dow Jones May Rise if Retail Traders Add Onto Downside Exposure

Chart Created in Trading View

DOW JONES SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that roughly 22% of retail traders are net-long the Dow Jones. Since most traders are biased to the downside, this suggests prices may continue rising. This is as short positioning increased by 20.29% and 24.86% compared to yesterday and last week respectively. With that in mind, the combination of overall and recent shifts in positioning offers a bullish-contrarian trading bias.

Gold Prices, Dow Jones May Rise if Retail Traders Add Onto Downside Exposure

TECHNICAL ANALYSIS

Dow Jones futures recently closed at an all-time high, taking out the November high at 36446. That has exposed the 100% Fibonacci extension at 36991, where the 123.6% and 138.2% levels at 37713 and 38161 respectively. This is as the 200-day Simple Moving Average (SMA) continues to offer a broader upside technical bias. That does leave the index vulnerable to a near-term pullback to the latter without necessarily overturning the broader uptrend.

 

DOW JONES DAILY CHART

Gold Prices, Dow Jones May Rise if Retail Traders Add Onto Downside Exposure

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from January 4th Report

Written by Daniel Dubrovsky, Strategist for DailyFX.com. 5th Jan 2022.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      20,129
    • Total Posts
      88,222
    • Total Members
      69,113
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Sherman_Charlie
    Joined 05/10/22 22:47
  • Posts

    • Elliott Wave Analysis TradingLounge Daily Chart, 6 October 2022, Uniswap (UNIUSD) UNIUSD Elliott Wave Technical Analysis Function: Follow trend Mode: Motive Structure: Impulse Position: Wave 2 Direction Next higher Degrees: wave ((3)) of Motive Details: Price tends to trade above 9.817, but must not reverse below 5.552 Wave Cancel invalid Level: 5.552 Uniswap (UNIUSD) Trading Strategy: The price tends to trade above 9.817, but be aware of the important resistance at the MA200 line, if it fails, there is a chance to reverse again. And it could be an opportunity to join the trend. Uniswap (UNIUSD) Technical Indicators: The price is below the MA200, and MASO line. momentum is bearish. Tradinglounge Analyst : Kittiampon Somboonsod Source Tradinglounge.comGet trial here!     Uniswap (UNIUSD) UNIUSD Elliott Wave Technical Analysis 4Hr Chart Function: Follow trend Mode: Motive Structure: Impulse Position: Wave 2 Direction Next higher Degrees: wave ((3)) of Motive Details: Price tends to trade above 9.817, but must not reverse below 5.541 Wave Cancel invalid Level: 5.541 Uniswap (UNIUSD) Trading Strategy:The price tends to trade higher steadily, but the MACD is declining. You may need to be cautious when trading during this period. But even then, Momentum is still positive above the MA200 and MAS50 lines. Uniswap (UNIUSD) Technical Indicators: The price is abovethe MA200, and MASO line. momentum is Bullish.
    • Stock Market SP 500, NASDAQ 100 NDX, Russell 2000 RUT. Dow Jones Industrial (DJI) Elliott Wave Technical Analysis and Trading Strategies. US Markets News Today: OPEC+ Agrees to Biggest Oil Production Cut Since Start of Pandemic/ reduce output by 2 million barrels. Elliott Wave Market Summary: The move upwards is a bear market corrective rally, how far it goes is the question and today I take a look a few possibilities  Elliott Wave count: Tracking two wave counts Day / Trend Trading Strategies: No Strategy Video Chapters 00:00 S&P500  16:15 NASDAQ 100 (NDX) 16:36 Russell 2000 (RUT)  21:45 Dow Jones (DJI) 24:35 End. Thanks for supporting! Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com    
    • Market data to trade on Thursday: Aussie Trade; Levi earnings With the upside risk for forecasts for the Australian trade data, IGTV’s Jeremy Naylor looks at the long trade on the Aussie benchmark, the S&P ASX 200. Earnings out on Thursday include Constellation Brands and Levi Strauss.      
×
×
  • Create New...