VantagePoint AI Market Outlook for the Week of December 16th, 2019
The VantagePoint AI Market Outlook is designed to help traders. It’s important to remain aware of correlations in the global markets. Traders can become more profitable if they know how to get ahead of the trends. Utilizing the predictive indicators in VantagePoint Software can help traders find the right trades and the right times. Above all, traders know when to enter and exit those trades for maximum profit. Let’s look at the charts for Equities, Commodities, and Forex Pairs.
Hello everyone and welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of December the 16th, 2019.
U.S Dollar Index
Now to get started this week, we’re going to begin with a very important US dollar index. Now the US dollar index, again, under pressure this week, not surprisingly with the Fed with the US-China trade deal, but a lot of these issues are becoming resolved here. It’s my understanding we have a deal between the US and China on the trade front.
The FOMC this week was very, very interesting to say the least. I’ve been a strong advocate that the Fed has got this dead wrong in continuing to cut rates. At the latest meeting, we’ve got five members that want no change in the current policy, we have an additional four members that want a 25 basis hike from this point forward, five more members want a 50 basis point increase from this point, and there was actually three members of the board from this point forward that want a 75 basis point hike.
Powell is in trouble here. His panel is telling him he’s wrong, that they should not be cutting. So again, it’s going to be very, very interesting as we go forward. But between the Hawkish Fed, and when we look at the US-China trade deal, this is showing that there is not going to be a recession in the near future and that the global growth is likely to start to pick up. So if things continue to improve, then that’s likely going to be good for equities going forward, it’s probably going to be decent for the dollar.
Now you remember in last week’s Forex Weekly Outlook too, that I had stated before the markets had even opened, that in most cases the dollar is weak after the non-farm payroll number and the Fed towards the end of the week. That is exactly what happened, but at the same time, that’s usually it and the dollar starts to strengthen. Now the indicators in VantagePoint are also warning that we could see dollar strength coming. Now the dollar is normally strong towards the end of the month and into the first week of the new month. I don’t see anything that is going to change that particular cycle. Just like again, as I had said in last week’s Weekly Outlook, that most of the data points towards the dollar a little bit stronger, but then it just sells off, so there’s no demand. Somebody needs to sell dollars around that time of the month.
When we look at things right now, we can see that the dollar is rebounding off of these VantagePoint verified support zones. When we look at this, you can see the verified support zone is very, very heavy. We’ve come right into the bottom part of this particular range, coming into the lower 96.28 area, and then a very strong buying coming in off that particular level. Now I’d like to see us get over 97.20 if we’re going to continue to buy US dollars.
The RSI is still not showing a lot of momentum, but the medium-term crossing, the long-term predicted difference, is warning us that dollar strength is coming.
When we look at gold, now, gold has recovered on Friday, but what’s interesting is, is that gold is following the equity markets. Now as we go into the end of 2019, gold is likely to remain locked in this particular range. The lower part of this current support zone, that’s coming in at or about, there’s a couple of zones down here starting around 1453.00, 1446.00, these are big support levels, guys. Now, if we lose those, and if we lose this area here, 1419.00, then we could have a much bigger problem going forward with gold because again, we’re not going to have a fed that’s going to be cutting rates.
It looks like China and the US are going to be getting along pretty good. The US, Canada, and Mexico have signed a new NAFTA deal, so everything is looking pretty decent here, but that is not a shining light here for gold. So again, if something, however, collapses before this trade deal gets signed, then I believe that’s why money is not coming out of gold at least yet.
Now with the equity markets, again, we’ve seen in the equity markets here, there’s been a number of articles posted about this guy’s record outflows coming out of the equity markets, 160 billion, more than the S&P or more now than what there was in 2008 and 2009. But just remember in 2008 and 2009 that was one of the best buying opportunities in history in the global equity markets. That’s a fact. That’s not fiction. Okay. So when we look at that and we look at these record outflows, most of the retail traders missed that move in 2009 and I personally believe that those outflows are showing retail traders that are unwilling to stay in this very uncomfortable long trade. So they exit.
So, it shows outflows. But again, the S&P is still, I do expect it to take one more pullback, but it’s a question of how deep that pullback is going to be. We have good support at 3132.00, we’re looking for that to hold, but more importantly, I’m looking for the lower end of this verified support zone at 3072.00, this most recent sell-off, that reversed very quickly, I might add. We’re looking for that to go higher. Now the medium-term crossing over the long-term predicted difference. I’ll point out here, the most interesting point of this indicator is that during this entire rally up, this pink line absolutely refused to cross over that blue line and there’s been a lot of choppy trade-in here.
But now it finally has crossed over. That suggests that the equities are going to finish the year strong and it further suggests that we could see more buying into January, February, and March. So for right now, unless there’s some major change in the market, most of these things that I’ve just discussed are supportive of stocks going actually higher, not lower.
Light Sweet Crude Oil
Now the stocks do have a little bit of something attached to it and I would say that that’s oil. Now oil may be able to extend higher here on the back of the market looking for global growth. If that’s the case, then oil will move up a little bit but I’m not expecting much here. Oil, there’s still a very high, supply is still very high, demand is very low. But demand may pick up a little bit with the move from OPEC, but again at this particular time, my optimism on oil moving higher still remains guarded. While the stocks may be able to move higher. I’m not convinced just yet that oil is going to continue to ride this wave on the back of the equity markets.
Now again, when we look at some of the additional markets here that people are looking at, like for example Bitcoin. Bitcoin is likely going to come under pressure next week or the week after or going into the year-end because of what I would anticipate as dollar strength coming along with strengthen the equity markets and gold softening a bit. If that’s the case, then that’s what we would be looking for. If Bitcoin cannot get back up above 7411.00 very soon, then it’s likely going to at least move into the lower part of the range around 6557.00. So keep an eye on those particular areas. Right now, the indicators are neutral to bearish inside the VantagePoint Software.
Euro/U.S. Dollar (EUR/USD)
Now, as we start to move towards our major currency pairs, you can see I have a number of different currency pairs and different groups I look at in my portfolios, but the Euro, again, what we want to look at here, the reason why we have the verified zones in the VantagePoint Software is to warn us that just because something goes higher it doesn’t necessarily mean it’s going to continue to go higher.
When we look at this, this verified resistance zone, the market just pierced that level and then immediately the sellers stepped in and drove the Euro right back down again. Now again, it doesn’t mean that the Euro can’t go higher. It just means the sellers are clearly camped out here and they’re just waiting for very much like the way a spider spins a web, the spider doesn’t chase its prey, it spins a web and lets it catch itself so they’ve cut, the web is being cast right up around this 1.1200 area, just under this 1.1200 area and it’s still unable to break it. We’ve got our medium-term crossing our long term predicted difference with the neural index both to point towards the Euro faltering as we move into year-end on that dollar strength. This is another way of confirming and the Euro, the Euro is at a very high correlation as of late to gold, so if gold does start breaking down, it’s going to pull the Euro down with it.
So the key reversal level we’re watching is 1.1078. When we look at our VantagePoint predicted moving average by itself, we can see that the Euro, much like a lot of other markets, hugs this or at least comes down and test this level every day. The current level 1.1105 I would anticipate we will come down and test through that and potentially breakthrough this level by Wednesday.
U.S. Dollar/Swiss Franc (USD/CHF) / U.S. Dollar/Japanese Yen (USD/JPY)
Now, when we look at the counter to the Euro-US trade, we’ve got the US-Swiss Franc, which is basically the same trade. One goes down, one goes up. If the Euro does go down, we would be looking for a complete reversal back to the upside on US-Swiss Franc on a global risk-on the environment. This would also apply to Dollar-Yen. We’ve enjoyed very good shorts on Dollar-Yen and on this particular pair, but it may be coming to an end if things start to settle down.
So right now, as you can see, we’ve come down into the VantagePoint verified zones, hit that basically to the number and you can see the last three days we’re basically stalling right down on that particular level, itching out a slightly lower low each day. But I believe that’s about to come to an end. So I’ll highlight this level for you right there. And I believe that they’re going to try and push this down a little bit more and then we’re likely going to get a full reversal back up to the VantagePoint key level 0.9882. But again, if we look at our long-predicted right now, this is where the market is struggling. So if you want to get in on a little bit better of an entry point, as soon as we start breaking above 0.9856, at that particular time it’s going to point to a reversal back towards the high of 0.9917. So there could be some potentially very good opportunity on this pair next week.
Now the same with Dollar-Yen. Dollar-Yen Is a little high. We’ve made our first run at the major resistance level at 109.72 and we failed, but we’re still closing above all of the key VantagePoint levels. We’ve got our medium-term crossing over our long-term predicted difference. Our MACD is in agreement and our predicted RSI at 76.3, all of this is pointing towards momentum building to the upside. But again, US-Swiss Franc and the Dollar-Yen are going to be dependent on the global economies and the global stock markets moving higher. If they don’t, then this trade will be off. We would still be looking to short into these particular resistance areas. So for Monday, Tuesday and Wednesday of next week, we want to watch the global stock markets very, very closely if we’re trading these pairs.
British Pound/U.S. Dollar (GBP/USD)
Now with the Pound-Dollar, again, I’ve been a strong advocate. You can see I still have my line drawn in here. We’re waiting for this resistance to break. We got that after the UK elections. We’re above our yearly opening price, so the British Pound is likely to retrace a little bit here guys, but it’s a clear buy. 1.3066 is the area we want to watch. Brexit is settled. The conservatives have complete power in the UK now, or that’s my understanding, I’m not in the UK. So everything looks pretty good. So a little bit of a corrective move and then we’ll see where we go from there. So 1.3066, but we can also assess here that during the course of the trading week, we’re hugging the VantagePoint long predicted, the predicted moving average. That level is coming in at 1.3185, so I would anticipate a test of that level on dollar strength between Monday and Wednesday, but we would also be looking to use that as a buying opportunity under the current circumstances.
U.S. Dollar / Canadian Dollar (USD/CAD)
Now, with our three main commodity currencies for next week, US-Canada, Aussie-US, New Zealand-US. The US-CAD was already showing strength surprisingly under the volatility this week, we’ve got good support sitting at the 1.3158 area. We’ve got to break through this level, make a clean break of that. You can see that we are not closing below that level, but I believe that if everything in the risk takes hold of the market, that we’re likely going to come down and test this 1.3042. But to be clear, the US-CAD, the Canadian Dollar is still dependent on oil prices. The US economy is doing far better than the Canadian economy and as the world moves towards green energy and all these things, oil really starts to leave a bad taste, pardon the pun, in people’s mouth and they’re starting to move away from it. I don’t think that’s going to be any time in the near future.
So the prices will remain stable. But the Canadian jobs report, the Canadian economy dependent on oil prices, low demand for oil, there’s still a problem with shorting this, particularly against a powerful currency like the dollar. So if the dollar starts to strengthen, then we would be looking for a potential buy zone, that would be coming in between 1.3158 and the additional zone at 1.3115. We want to look to potentially target this area and I would still be looking to potentially buy this thing even on the low of 1.3042. And then keeping my stops. Wherever you’re buying it in this particular section, you want your stops below the current overall range. Again guys, if you believe that the Canadian dollar is going to weaken, like I do, maybe not next week, but it’s coming, then you would not want to get stopped out anywhere inside of these verified zones.
It’s somewhat of a sucker’s bet here guy, so you would lower your position size a bit so you can actually withstand a little bit of volatility or just simply wait and see, first of all, can we actually break down and stay below 1.3158? If we do, then like I said, we’ve got our target zones, we go after that. But at 1.3042, I say either way it’s likely the US dollar starts to make gains against the Canadian.
Australian Dollar/U.S. Dollar (AUD/USD) & New Zealand Dollar/U.S. Dollar (NZD/USD)
Now, with the Aussie this week, the Aussie and New Zealand, the Aussie made a break for it here again after that, but you can see that it came up kiss the VantagePoint verified zone at 0.6928, the area that I talked about in last week’s Weekly Outlook that we have to break through this verified zone if we even have a shot at getting to the next one. Well, it came right up to that level, guys, and the sellers were just sitting there waiting.
One could trade-off these zones solely and then mix it up with the VantagePoint indicators. So if I see the medium-term crossing the long-term predicted difference, and then I know that I’ve got a verified zone sitting up here. That indicator you can actually see was several days ahead of this big move up. But it’s still saying that the trend on the Aussie against the dollar was weakening, that came to fruition and down we go. So if we click on our FA and use our T cross or our long predicted, excuse me, that key pivot area now is 0.6856, we’re looking, if you believe that the Aussie is going higher, watch this level very closely, but if we break down below 0.6556, that would signal that the Aussie is likely going to continue in its long-term downtrend.
The same basically applies to New Zealand here guys, there’s not a lot of difference between the Aussie-US and New Zealand from a currency perspective. It’s not like the difference between a healthcare stock and a tech stock. These are basically one of the same. So when we look at this right now, you can see that New Zealand is struggling up here. It’s not really going anywhere. A big verified zone that was identified using the AI in the VantagePoint Software that high coming in again, 0.6586 we try and make a little break above there. And again, it’s a bull trap sitting up there. The retail traders start getting long and next thing you know, bang, they pull the rug right out from underneath them.
So we still need to watch the high, this particular high is 0.6575, if we slip back below there, then likely we’re going to go for a full retracement back to 0.6504. And if we break down below that, then we look for a trend, the overall primary longer-term trend on New Zealand-US to continue, which is clearly down.
So with that said, this is the VantagePoint AI Market Outlook for the week of December the 16th, 2019.