VantagePoint AI Market Outlook for the Week of January 27th, 2020
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, welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of January the 27th 2020.
U.S Dollar Index
Now to get started this week, we’re going to begin where we always do, at that very important US dollar index. Now, you remember in last week’s weekly outlook, I had talked about or discussed the monthly seasonalities of the dollar, which are very important, and I was able to accurately call that the dollar would strengthen towards the end of this previous week. That’s come to fruition. Now, this is a normal phenomenon that I see each month in the US dollar, usually at the end of the month, end of the first week, there’s a very large demand for US dollars. So that is likely corporations, banks, governments requiring US dollars. So they’re looking to buy them at that time. And then we tend to lose demand at the end of the first week of the new month, usually after the non-farm payroll.
So when we look at the dollar, most of the signals here from VantagePoint suggesting the dollar is going to extend higher. When we look at our key pivot area here, our T cross long 97.15, we’ve managed to stay above this level the entire week despite the fact I might add, we’ve had a very bullish move on gold. Now once again, the month of January has shown to be rather strong for the month of gold. When we’re looking at the year over year seasonality, that too is coming to fruition. There’s a lot of demand for gold, but there’s also demand for the US dollars particularly against, I would say about 85% of the currency pairs. When we break down our key pivot area on a daily basis, we can see our predicted moving average by itself and how the market is in regular contact with this level, again on a daily basis so as long as we’re holding above 97.38 the dollar is likely to remain from.
Now we do have the FLMC this week. That is the biggest event risk to the dollar. And we don’t know what the Fed is going to do, we don’t know what they’re going to say, they’re going to have a press conference, so just be very cautious around that announcement because it’s always a wild card. The best of the best have not been able to predict what the Fed is going to do. So just keep that in mind.
Now, as we do look at those gold contracts as I’ve just discussed, of course, gold not moving below that key VantagePoint level at 1549.00 in the calendar year 2020. As I’ve already suggested, there’s good solid demand across the board for gold in the month of January, we’ve got our fresh buy signal here with our medium-term crossing, our longterm predicted difference, but again, we’re holding above that critical pivot area.
When we come down and look at the blue line, the VantagePoint predicted moving average with the correlation of 31 other markets. That pivot area has continued to hold this entire week, so if we’re just using this blue line to buy gold contracts off and then close them out daily, we’re having not only a very good week, but I would point out a very, very good month to start off the calendar year. When we look at this going back, this rally actually is identified and VantagePoint was actually starting back here towards the last week of December and it has not given up any of those gains. We’re holding firm, but again, nothing goes straight up and nothing goes straight down. But for now, going into the month of February and the remainder of January, gold is still looking pretty good.
Now the S&P 500 not surprisingly on Friday, we see this very often where we get profit-taking towards the end of the week, but I’m not convinced the equity markets are going much lower than 30 to 80. Be very careful of this one on Monday. Look for a big push down on Monday and then a complete reversal on Tuesday. Tuesday is a reversal day. Now, the one a sore point I will point out to equity bulls here when we look at that blue line by itself, that predicted moving average, we have been repeatedly closing above this area. Now, we’ve been closing above this area going all the way back again into December the fifth. We have continued to close up, we’ve penetrated below the VantagePoint predicted moving average, but we’ve actually only managed to close below it once, maybe twice during this whole time. So we’ve closed below this on Friday. This critical pivot area now is 3308.00. If the equities are going to turn bearish here guys, we have to hold below this level. We also must break down below that critical level of 3280.00 that I just discussed.
So we’ll watch it very closely, but the indicators are pointing towards the potential of a bigger move. So again, watch those critical pivot areas that I just discussed.
Light Sweet Crude Oil
Now again, light sweet crude oil, I had talked about that last week, that supply and demand basics have not changed one bit here. The probability that oil keeps going lower, that I had talked about in last week’s Forex Weekly Outlook, and again, I will point out that this outlook is being done, for the most part, Saturday afternoon, is when this is posted, before the any of the markets including oil and the futures contracts even open. We’re looking at forecasting out as to what’s going to happen. I’m not concerned with what’s currently happening, we’re looking at what’s going to happen.
So oil is coming down into some very strong verified support down in this 53.44 area. Be extremely cautious here guys of reversal on oil. Now, by reversal, I don’t necessarily mean that oil is going to go right back up to $66 a barrel, but we’ve moved a considerable distance away from the T cross long at 58.29. When we look at that critical pivot area, also the same thing, once we break down below and close below this two days in a row, and again, even after this big bear move down here, we’ve come back up, retested this critical VantagePoint predicted moving average multiple times, and now we’re taking yet another leg down. So we’ll keep a close eye on this, but right now just be cautious of a potential reversal or a bear trap down here because again, we’ve had a good move down, we’re still within the overall range. If we break down below 53.44, then we could see something bigger. We’re closing at 53.85 so again, we could have a long trade here. I’ll be monitoring it very closely to begin the week.
Now, once again, I feel it’s beneficial in the Weekly Outlook to look at all markets. While some investors disregard Bitcoin, I’m not one of those people anymore. I’ve listened to Warren Buffet saying that Bitcoin is a scam and all these other things. I don’t agree with one word that he has said. Bitcoin was a fantastic investment in 2018 and 2019, and it’s already out of the gate. We’ve opened up the year. I believe if we come back and look at the opening price for the year here on Bitcoin back in January, we’re down in this 77,000 mark. We’ve already, in just the first week of January, we have hit 8659.00.
Once again, this appears to be following gold, but a very strong investment rate out of the gate in 2020 here guys. Don’t let anybody convince you that something’s bullish or bearish without actually looking at a chart. Look at your yearly opening price, and you should be so to speak in the famous words of Seinfeld, master of your own domain here. Don’t dictate to the market what it should do. Let the market dictate to you what you should do.
So right now again, we’re coming off a nice big move up here. We’re holding above that critical level on VantagePoint. Now, I do have some concerns still that we’re breaking down below this predicted level, but we’ve had such a big move up already to begin the year. A retracement is perfectly normal. That retracement has nothing to do with Fibonacci or waves or any of this stuff. We simply, the buyers start taking some profit and we see a bit of a pullback. So right now, as long as we’re holding above this low point of 7677.00, longs are clearly favored on Bitcoin or any spinoff of Bitcoin like GBTC Bitcoin Trust. You don’t have to go into Bitcoin futures. It trades CFDs, again, GBTC and ETF, nothing wrong with having a peek at that guy’s. We’re just looking for places of value to make some money here, that’s it.
Euro/U.S. Dollar (EUR/USD)
So when we go into our main Forex, pairs, the Euro under pressure this week a little earlier than normal. I’d normally anticipate the Euro US pair to come under pressure towards the end of the month and into the first week of the new month. But this one’s coming a little bit early. Now, we’re still in the overall range and what I would suggest is, watch for the Euro to come down into this lower-mid 1.09 area 1.0980, 1.0950. And towards the end of next week and into the next week after the Fed and we start the new month, start to look for potential Euro longs here.
Now again, when demand for the dollar dries up, the Euro reverses. We’re already starting to move into an oversold condition here at 11.8 on the predicted RSI. But guys, we never ever trade-off of overbought or oversold signals or any fancy terminology thereof, accumulation distribution. That is not an effective way to trade, guys. Just because something is oversold, doesn’t mean that it’s going to go higher. If you get into a trending move in the first quarter, the Euro could go considerably lower. But as long as gold is holding its value, I believe that the Euro will turn around. So we’re going to watch that very closely. Right now, it would be rather aggressive to short at this particular area, but what I can tell you guys with a degree of certainty is that we are going to come back up and test this 1.1071 area. This is the predicted moving average from VantagePoint. You can see that four of the last five trading days, we have been in direct contact with this blue line, but we have not been able to break above it. As soon as we do, we’ve got the green light to start looking at longs.
U.S. Dollar/Swiss Franc (USD/CHF)
Now, when we look at US-Swiss Franc, going into a period of known dollar strength, we may actually get a buy on this thing. This pair, I have to admit defies logic. It normally is a very high correlation to the equity markets and it’s been ignoring it. It’s just been doing its own thing. So this is the first time in a considerable period of time that we’ve managed to close above the T cross long.
Now again, this trend started back here. As we’re starting to break above this blue line and close above this blue line, we can see that that led to a fairly decent rally. Now, we’ve got verified resistance at 0.9728 that we must break above. We’ve got additional resistance at 0.9762. I would anticipate we will see a move to 0.9762 next week, we’ve just got to see if we can break above it and get this thing moving higher, but right now longs are favored, particularly here guys, where we’re above the 0.9612 area.
British Pound/U.S. Dollar (GBP/USD)
Now, as we go in and look at the pound dollar here, the pound dollar has had a decent week where they had some good economic data in a holiday short week this previous week, but again, we’re failing up at this VantagePoint verified resistance, that verified resistance coming in at 1.3118. You can see that we only managed to close above it one day and then we started slipping below it. And then by the time we get to Friday, we have a complete meltdown and down we go.
Now, once again, if we look at our blue line here, our long predicted which takes the correlation, again, 31 other markets, we’re closing ever so slightly below that by about 12 pips. So we’re going to see where we go. Just remember that that good economic data out of the UK doesn’t change what’s going on with Brexit. Nothing has changed here. So again, we’ve got the Bank of England next week. I don’t think they’re going to hike. I think they could be a little bit dovish, they could come out hawkish, that will send it higher. So you’re at the mercy of the bank of England coming up this week. Be very cautious with this particular pair.
U.S. Dollar/Japanese Yen (USD/JPY)
Now, with the dollar-yen, this is one I’ve been working on with my own direct clients, a really, really nice trade here. We’ve got our medium-term crossing our longterm predicted difference up against a very strong verified support level. Now again, very mixed signal coming into this, but if you look at the VantagePoint long predicted, you can see when the market starts losing its real momentum, that was back on the 22nd. Then on Thursday and Friday, we had two powerful moves down. One directly off the VantagePoint long predicted the other one on a retracement back to it and down again. So you can see the additional indicators have come online. So we’re likely going to have a continued move lower next week, but it will be dependent on the equity markets to be very clear if the S&P… This could be a leading indicator for the equity markets that they’re getting ready to move lower, but we must keep moving lower on dollar-yen if we’re going to sell the S&P 500 to be very clear.
So this is not just one trade here, guys. This is multiple trades. If the dollar-yen keeps going lower, then gold is likely going to keep going higher. The S&P 500 will likely keep going lower, that’s what we want to watch, the direct inter-market correlation. So for now, shorts clearly favored while below the verified resistance at 110.28.
U.S. Dollar/Canadian Dollar (USD/CAD)
Now, with our three main commodity currencies, the US CAD, Ozzie, US, New Zealand, US the bank of Canada’s certainly showed no love to the Canadian economy or the Canadian dollar, and that sent it up pretty high. Now, we’ve had very little follow-through since then, so my concern here is that we’re a little bit overbought. Again, I’m not trading off an overbought or oversold signal, I could usually completely disregard that, but what I will not disregard is the verified resistance zone. So we need to break above 1.3181 very, very early in the week, guys, if longs up here stand any chance. Our key VantagePoint level, where I would prefer to be a buyer would be down in the 131 area. Once again when we break it and use that long predicted by itself, you can see on Friday, we came right down to this blue line, kissed it at 1.3113 and then bounced away from it. That’s the kind of trade we’re looking for.
So to begin the week and the better part of next week, we want to be holding. If we’re going to go long, we would focus more around the 1.3100 area and look for the market to stay above that particular area.
Australian Dollar/U.S. Dollar (AUD/USD) & New Zealand Dollar/U.S. Dollar (NZD/USD)
Now, with Ozzie last week, once again, we just simply could not get anything going with this even though the economic data coming out was very, very supportive of the Ozzie dollar, just could not get anything through it. Now to explain what happened there, this in my respectful opinion is what is causing this, the VantagePoint long predicted, the predicted moving average by itself. You can see multiple days, we try and get above this thing and close above this blue line and we just can’t do it. That sends the Ozzie lower.
Now, we are coming into a verified zone. We will be looking for potential longs on Ozzie, US towards the end of next week. Again, I’m looking for the dollar to go through its normal period of demand, and when demand dries up for US dollars, we look for places of value to sell those US dollars. The Ozzie could be one of those, so we’ll keep a very close eye on that.
New Zealand is already, believe it or not, trying to buck the trend here. We’re closing below 0.6621, but again, if we look at the blue line by itself, we are really hugging this thing and we’re basically trapped between the verified support level at 0.6584 and the VantagePoint long predicted at 0.6611. Very difficult to script this stuff guys, when it happens day after day after day. So if we’re using that blue line to trade off of, and using it for an entry point and also using it for a way to gauge momentum in the market, whether the market’s bullish or bearish, meaning if it’s below the blue line, it’s bearish, if it’s above the blue line, it’s bullish, then it’s a far more effective way to gauge market sediment.
So with that said, this is the VantagePoint AI Market Outlook for the week of January, the 27th 2020.