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Gold Costs, Dow Jones Might Rise if Retail Merchants Add Onto Draw back Publicity

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Gold, XAU/USD, Dow Jones, Technical Evaluation, Retail Dealer Positioning – Speaking Factors

  • Retail merchants growing draw back publicity in gold, Dow Jones
  • As a contrarian sign, this could possibly be an indication of a rosy path forward
  • XAU/USD and Dow Jones near-term uptrends stay intact

Having a look at IG Consumer Sentiment (IGCS), retail merchants have been more and more betting that gold costs and the Dow Jones could fall forward. In different phrases, net-long publicity in these belongings is on the decline. IGCS can at instances be a contrarian indicator. With that in thoughts, if this pattern in positioning continues, gold and the Dow Jones might rise within the coming days.

Gold Sentiment Outlook – Bullish

The IGCS gauge exhibits that about 73% of retail merchants are net-long gold. Since most merchants are nonetheless biased to the upside, XAU/USD might fall. Nevertheless, draw back publicity has elevated by 48.65% and 29.27% in comparison with a day and per week in the past respectively. With that in thoughts, the mix of total and up to date modifications in positioning gives a bullish-contrarian buying and selling bias.

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

Technical Evaluation

A rising vary of help from August continues to supply an upside technical bias for gold. Broadly talking, nevertheless, the yellow steel stays unchanged from value ranges seen in July 2020. Instant resistance seems to be the 1827 – 1834 inflection zone, which stands in the best way from reaching the November excessive at 1877. Breaking below the trendline exposes the December low, which is carefully aligned with the 61.8% Fibonacci retracement at 1756.

XAU/USD Day by day Chart

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

Chart Created in Buying and selling View

Dow Jones Sentiment Outlook – Bullish

The IGCS gauge exhibits that roughly 22% of retail merchants are net-long the Dow Jones. Since most merchants are biased to the draw back, this implies costs could proceed rising. That is as brief positioning elevated by 20.29% and 24.86% in comparison with yesterday and final week respectively. With that in thoughts, the mix of total and up to date shifts in positioning gives a bullish-contrarian buying and selling bias.

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

Technical Evaluation

Dow Jones futures just lately closed at an all-time excessive, taking out the November excessive at 36446. That has uncovered the 100% Fibonacci extension at 36991, the place the 123.6% and 138.2% ranges at 37713 and 38161 respectively. That is because the 200-day Easy Shifting Common (SMA) continues to supply a broader upside technical bias. That does depart the index susceptible to a near-term pullback to the latter with out essentially overturning the broader uptrend.

Dow Jones Day by day Chart

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

Chart Created in Buying and selling View

*IG Consumer Sentiment Charts and Positioning Information Used from January 4th Report

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter

DailyFX gives foreign exchange information and technical evaluation on the developments that affect the worldwide forex markets.

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