VantagePoint AI Market Outlook for the Week of August 10, 2020
U.S. Dollar Index
Hello, everyone. Welcome back. My name is Greg Firman, and this is the VantagePoint AI Market Outlook for the week of August the 10th, 2020. Now, to get started this week, we’re going to begin where we always do with that very important US dollar index, which is dictating commodity prices, equity prices, currencies all the above. So when we look at the dollar from last week’s weekly outlook, I had suggested that the dollar could turn around to some degree on the nonfarm payroll number. We did get a very good payroll number in my respectful opinion. Quite good, not perfect, but decent. So when we look at the indicators here from VantagePoint again, we had formed a verified support zone the week before in our trading and we were unable to break below there.
This is exactly why the Euro lost ground this week against the dollar because again, if the dollar index cannot continue to move lower, the Euro cannot move higher. That’s the way that currency works. And of course, the very high correlation to gold contracts. So what we look at here now, and first understand that this is a corrective move higher in the dollar. This is not a new trend here guys. Right now, when we look at this, our TCross Long 94.06, we would have to get above this level and stay above this level to see the dollar reverse. Now, the first sign of that again is going down to our blue line by itself, we can see that we have closed above that predicted moving average 93.19. We now need to hold above this level if the dollar has any hopes of gaining any of its loss ground back. Now, when we look at the dollar index, it is something I would point out that if we look at gold prices at 2,050 per ounce, the last time gold was at that level, the dollar index was at the 72 levels.
So the dollar is holding its ground despite a lot of other microeconomic issues, a lot of different tariffs, everything that’s going on. So again, we would have to take out that level for further strength. When we look at gold, we can see that gold is failing up near these all-time highs here. Now, again, this doesn’t mean that the trend is over in gold. It simply means that it’s getting a little bit exhausted and the market was expecting a very poor number out of the nonfarm payroll number and they didn’t get it. So when we look at this right now, we first must understand that the key level for gold here is 93.53.
Gold is still bullish while above this particular level. Now, again, another way to hone in on those particular areas, because again, much like last week, this is an outlook, not a recap of something that’s already happened.
So the key level here right now to start the week will be 2030. If we can hold above 2030, then gold should extend higher. But again, when we look at it, we’ve had a long period on the neural index. We’ve gone from green to red. This suggests we’re going to correct a little bit lower first. So again, watch the level between 1968 and that 2030 area for additional strength with gold.
S&P 500 Index
Now, the S&P 500 relentless in its climb higher as it continues to move back towards that 33 95 area, we could see a corrective move lower, but again, the main thing here guys is to know your levels, that the reversal point on the S&P 500 would be 30 to 60 for next week. That’s what we’re … because again, this is an outlook not a recap of something that already happened.
We’re looking to monitor these levels right there at 30 to 60. Now, the first level we would watch, you can see this predicted moving average. So that has the correlation of 31 other markets into that blue line. The market on a daily basis is coming down and hitting this blue line and then bouncing off of it. I’ve watched forums, I’ve watched all these different things. People, the bowls, the bears arguing, it’s going higher, it’s going lower, it’s going higher, it’s going lower. We don’t want to get caught up in these silly debates, on Facebook and all these other things. We just simply want to know our levels. This is how we make money guys. So when we look at this right now, it’s indisputable that this is bullish. But again, just like as I had stated in last week’s weekly outlook, I would anticipate another test of this level at 3313.
So as we’ve had a decent close for the week, closing the week out at 3346, we would expect to pull back towards that particular area. And then we would reassess after that while also using the TCross Long, very, very important that we’re doing that.
Now, the other currency that I would like to add to this weekly outlook is Bitcoin. I’ve been a strong advocate on Bitcoin for at least a couple of years here, because again, I don’t get caught up in debates, bullish, bearish, my indicators better than your indicator. I don’t go down these particular roads. All I do is look at price. Bitcoin has tripled in value two years in a row. That’s all I’m looking at. So when I see this, there’s a lot of digital currencies that are on the rise here. I don’t think we should underestimate Bitcoin.
We’ve come up to the 14,000 mark. I’ve often stated in the VantagePoint live trading room. We have a number of different vehicles to trade this. What I’m showing you right now is Bitcoin investment trust. In the VantagePoint live trading room, we were looking at longs on this particular ETFs around the 950, 920 mark. Again, I don’t like to go backwards, say what … because it’s too late to go back and get it into a long at the $9 a share mark. But what I did state and very clearly, in last week’s weekly outlook on the main Bitcoin contract is the 10,930 area is somewhere where I would look at potential longs for this.
So we can assess that that did come to fruition. Bitcoin did come down to that particular level. So the critical levels on Bitcoin for this coming week are 10,642.
We would have to break below that to take the pressure off the upside. If we again, click on our F8, we can identify a daily pivot area. That level now is coming in at 11,159. I’m not convinced that the US dollar is out of the woods here. And I think there will be further weakness in the dollar. So Bitcoin, maybe the beginning of the week, we get a couple of good days on the dollar index and then it starts backing off again. That would be the opportunity to go after this again. So keep an eye on that, because again, we could see another significant leg up on Bitcoin after we get our corrective move on Bitcoin. Now, when we look our corrective move on the dollar index would drive the Bitcoin contracts, excuse me.
Oil for the next week, once again, oil got a little bit of a bump up here on the news out of Beirut with that explosion.
But like in most cases here, guys, it’s just rumors, it’s market reacting. And then after it’s all done, it just comes right back to where it was, closing the week at 41.22. There’s still a very high supply and very little demand for oil. So I’m not anticipating any big major moves in oil next week, unless we have more conflict in the middle East. But even then, this bar, the explosion bar here is really not that much, is it? And again, we come right back to our key VantagePoint level, the TCross Long at 41.07. If we’re breaking down below that we should see oil extend lower. Now, for this coming week, as I had stated accurately, I might add in last week’s weekly outlook that I didn’t anticipate the Euro doing much this past week with the nom until after the nonfarm payroll number, we’ve got a better number, but what I did state very clearly, and let me be clear.
Euro versus U.S. Dollar
This is a weekly outlook, not a quarterly, or monthly or yearly outlook. It’s a weekly outlook. So I don’t get into debates about where the Euro is going in to the future, whether it’s the best buy in 2020. It’s not. It’s a buy, but remember the Euro is up here for one reason. They have a settlement on an agreement in principle on the debt that’s building up in the Eurozone, but just remember here guys, there is considerable amount of debt building up in the Eurozone, just like the US, just like Australia, just like Canada. I will point out however, that the other Forex pair that has a very, very high correlation to Euro US is Aussie US and there could be better value on the Aussie than buying the Euro up here at these particular levels. Now, a further example of that is that the last time that gold was at 1930, 1950 an ounce, the Euro was at a 1.50?
So that shows the real world depreciation of not just the US dollar, but also the Euro. We are considerably lower than that. The Euro in the week made nothing for gains. It did not extend its previous week high, but as I also stated in last week’s weekly outlook, I provided very specific levels to buy the Euro from off of this VantagePoint blue line at the one 1.1738 area. And I had stated clearly, if this level holds, we would continue to buy off of that and we would keep our stops below the long predicted. I am in the camp that the dollar is going to see further weakness, which may see the Euro rise further. I think there’s other places of value to sell dollars than against the Euro because again, the Euro is structurally the same as the dollar when it comes to debt, all of these things.
Actually, I would say the Eurozone is worse and they’re well into zero interest rates also. So it’s not that we’re not long the Euro, but again, this is a week to week. This is not a longterm outlook here, guys. It’s a short, it’s a one week outlook for what’s going to happen next week. So for this particular week, once again, we look at these key levels. Now, the Euro’s been hugging this predicted moving average for a considerable period of time, an entire month. So a corrective move lower is perfectly natural, but again, we would have to break down below that [inaudible 00:10:50] level here off that TCross Long before there’s a reversal in the Euro. And I will further point out that the bulk of the Euro gains came right in this level rate here when we brought the yearly opening price around 1.1207 is when the Euro became bullish.
And that was back over here, back in the beginning of July, this is where the Euro really started to go. But again, that shared debt agreement is what has driven, this thing up here, and it may continue to drive it further. So we will monitor the key levels. And for now, longs are still reasonable while the dollar is below the dollar index, is below that critical level. Now, when we look at the additional pairs that US Swiss Franc, once again, we’re correcting higher. We are not in a trend reversal on this yet, guys, not yet anyway. We have our predicted differences rising our neural indexes up, but our size is well below 50 and well below 60. So again, the move here appears to be corrective. If we go down and look at our blue line, this is the first day we’ve been able to close above this.
We did close last week’s high above there, but then subsequently went lower. But now we’ve got a pretty strong base forming here at about the 9080, 9060 level. And it’s possible we could rise a bit further here. Now, again, this would be a corrective move guys. It wouldn’t mean necessarily a trend reversal.
British Pound versus U.S. Dollar
Now, as we look at the pound going into next week, I had stated in last week’s weekly outlook that I did not anticipate the British pound to break above 132 and it did not. Now up here, we have the yearly opening price. So when somebody tells you that the British pound is bullish, it’s positive, it’s this and that, that’s simply not factual, guys. The British pound has been below its yearly opening price the entire calendar year. It has been very, very bearish. Now, we’re correcting higher.
If I’m going to buy the British pound, I want it free and clear of the 132 level. It’s very dangerous in longs up here. The VantagePoint is accurately forecasted by using the predicted differences here, that the trend in the medium term and the longterm is weakening. So that’s what we monitor. Now, we are above our TCross Long at 1.2903. I would anticipate there’s a strong possibility that we would come down and test this level on Monday or Tuesday. Now, we would look for a break at that level and closing below that level before we would get too aggressive with shorts. Now, again, if we click on our F8, we can see that we’re just barely closing below this long predicted. Now, if we can stay below 1.3057 … because again, this is an outlook, not a recap. We’re talking about levels that haven’t been hit yet.
So again, on a predictive basis. So if we can hold below one 1.3057, that’s how we’re going to get into that 1.29 level, guys. But if we can’t hold below 1.3057, then the pound will reverse and go higher, and the dollar will come under further selling pressure. Right now, at least for the start of the week, the VantagePoint software is forecasting we are likely to go lower.
Japanese Yen versus U.S. Dollar
Now, the dollar/yen tried to recover this past week, but even with the nonfarm payroll number, we were unable to break above the TCross Long, this critical VantagePoint pivot area 1.0604. So again, we need to break free and clear of that. Our predicted differences are rising. Our neural index is up, we’re above 50 on the RSI. If we can break through 60, then we could see a short term reversal higher in the dollar/yen.
Again, I would still be very cautious around that 1.0647 area. If we break through one 1.0647, we should be able to get up towards the high at 1.0752. But that would mean that we would need gold prices lower and equity markets higher. That’s what it would take here, guys.
Now, with the US/Canadian pair coming under pre-selling pressure, the Canadian dollar again on Friday, a little oversold down here. But again, when we look at the key levels, we must break through the TCross Long next week, 1.3416. If we do, the clinic dollar we can further … we would like to see oil prices moving lower if we’re buying this particular pair. If oil prices and equities go higher than shorts it would still be on the table. So once again, when we understand the key level of 1.3416, we click on our blue line by itself, our predicted moving average by itself, and we have finally managed to close just above this.
So our critical pivot area to start the week guys is 1.3363. We’re looking to see if we can hold and close above this on Monday and Tuesday. And that would see us likely extend higher the very least probably around the 1.3459 area. But if oil inequities come under pressure, we could start moving back towards the 1.36 area. We can’t rule that out. The Canadian dollar is still structurally very weak. Now, with the Aussie and the New Zealand, once again, here, guys, just to bring this up and to provide an alternative to Euro/US, I think that Euro/US could be a little tired up where it is, but when we look at places of value to sell dollars, then the Aussie does come to mind and here. The signal is not perfect, but again, we’re looking at the key vantage pivot areas.
That level is 7118. That’s right around the yearly opening price for the Aussie. Also, the Aussie has made consistent gains, but nothing goes straight up and nothing goes straight down. There’s always going to be retracements whether that be Fibonacci or what I like to use are these key VantagePoint levels, the blue line here by itself. The Aussie of course, under pressure after that nonfarm payroll number on Friday, but we have to now see if there’s any follow through to this. So again, we need to know our levels. If we’re holding below 7171, then shorts are on the table down to that 71 level. We would reassess at the 71 level if we want to flip out of that and go long again, because again, if gold prices continue to rise. If the Euro/US pair rises, then the Aussie will follow the Euro.
This is the key to inner market analysis. We don’t want to focus on just Euro/US, or just great Britain/US or just US/Canada. We want to look for places of value for our investments. So keep an eye on that critical level that I’ve mentioned.
New Zealand Dollar versus U.S. Dollar
The same with New Zealand. Ultimately, if the Aussie continues to extend higher, then the New Zealand is going to follow, but we have a far more ominous signal here on New Zealand to start the week. We have broke down below 6623 but again, that’s because of the nonfarm payroll number, the surprise number, it was a pretty decent number. So again, we still have a very strong verified support level at the low of 6575. We’re going to see if that hold, we want to monitor to see if the equity markets continue to extend because the Aussie, the New Zealand and the CAD are more equity based currencies than commodity-based currencies as of late. So with that said, this is the VantagePoint AI Market Outlook for the week of August the 10th, 2020.