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S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

S&P 500, Dow Jones, DAX 30, Trader Positioning – Talking Points

  • S&P 500 and DAX 30 may rise on signals from IG Client Sentiment
  • Dow Jones struggling around the 20-day simple moving average
  • All 3 may see bearish technical signals emerge if prices rise swiftly

In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for the S&P 500, Dow Jones and DAX 30. For a more detailed overview including fundamental analysis, check out the recording in the video above.

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Jul 01

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S&P 500 Sentiment Outlook – Bullish

The IGCS gauge implies that 31.94% of retail traders are net long the S&P 500. The number of those exposed to the downside have climbed by 4.15% and 8.69% over the past 24 hours and week respectively. From here, the combination of current sentiment and recent changes gives us a stronger bullish contrarian trading bias. From a psychological standpoint, that may speak to a rising share of traders attempting to pick the next top.

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S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

S&P 500 Technical Analysis

On the daily chart below, S&P 500 futures are struggling to close above a key range of resistance between 3118 – 31156. Prices seem to be supported by the 20-day simple moving average which could precede a push higher. In such an event, keep an eye on RSI. A swift climb towards next resistance (3213 – 3231) could open the door to negative divergence, a sign of fading upside momentum.

S&P 500 Futures – Daily Chart

S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

S&P 500 Futures Chart Created in Trading View

Dow Jones Sentiment Outlook – Mixed

The IG Client Sentiment (IGCS) implies that 45.91% of retail investors are net long the Dow Jones. The number of traders net short are 3.08% down from yesterday. However, over the course of one week, those exposed to the downside have increased by 7.08%. The combination of current sentiment and recent changes gives us a further mixed trading bias.

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S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

Dow Jones Technical Analysis

Dow Jones futures are trading right on the 20-day simple moving average after temporarily falling under it. Prices may struggle to push further as resistance holds between 26193 – 26658. A turn lower from here places the focus on support 25230 followed by the 24507 – 24792 inflection range. Keep a close eye on RSI in the event prices push towards the June 9 high, divergence could emerge and show fading momentum.

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Dow Jones Futures – Daily Chart

S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

Dow Jones Chart Created in Trading View

DAX 30 Sentiment Outlook – Bullish

The IGCS gauge implies that 32.26% of retail traders are net long the DAX 30. Those positioned to the downside have increased by 15.91% and 18.81% from yesterday and last week respectively. The combination of current sentiment and recent changes gives us a stronger bullish contrarian trading bias as traders attempt to pick the next top in the German benchmark stock index.

S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

DAX 30 Technical Analysis

On the daily chart below, DAX 30 futures remain in an uptrend which is upheld by rising support from March’s bottom – red line. Recently, prices struggled to drop under the 20-day simple moving average, perhaps speaking to underlying bullish momentum. That could pave the way for a test of early June highs as the focus turns to resistance at 12882. Here too negative RSI divergence can emerge.

DAX 30 Futures – Daily Chart

S&P 500, Dow Jones, DAX 30 Forecast: Prices May Rise, Watch RSI

DAX 30 Futures Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from June 24 Report

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

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