Vantagepoint AI Market Outlook for July 19, 2021

Vantagepoint AI Market Outlook for July 19, 2021

Welcome to the Artificial Intelligence Outlook for Forex trading.

VIDEO TRANSCRIPT

Hello everyone and welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of July the 19th, 2021. Now to get started this week, we’re going to begin with, again, the U.S. Dollar Index and continue learning about inner market correlations and how they affect the markets that we’re trading. One of the greatest advantages that inner market correlations have with using artificial intelligence is of course removing a considerable amount of lag from the system. So we know what some of these inner market correlations are that we’ve been working on for the last several weeks. Then we can better understand that when one market moves, it will move multiple other markets.

U.S. Dollar Index

Now, as we look at our analysis with the Dollar Index into this coming week, the dollar is still showing signs of life here, but it’s unable to break through these verified resistance highs coming in at approximately 92.82. What we would need is a sustained break of this particular level, but my optimism on further dollar strength above that level even if we can get above it is likely going to be limited to the 93.50 area, 93.43, the yearly high. So we’re above the yearly opening price. We’re trying to advance back towards the yearly high point, but again, struggling to get there.

Now indicators that we look for in the VantagePoint software to warn us that we could have pending strength. Number one, we want to be above that T cross long, that area 92.20. We are also looking for a positive neural index, positive momentum. The medium-term is trying to cross the long-term predicted difference. Now this pink line crossing that blue line will tell us if the dollar, if this trend is going to continue back to the upside, but again, we must clear these zones.

U.S. Dollar Index

Now, again, building on those inner market correlations. When we look at inner market correlations, we can view inside or under the hood of the VantagePoint software. And we can see in the future side, the Dollar Index having a both strong positive and inverse correlation to the 10-year treasury note, we’ve got the British pound, natural gas, the Euro Dow Jones. Of course, we’re going to see gold. Now internally, we can break that down even further by going to the more specific highly correlated markets. So if we look at these ones here in green, they’re positive and red, they’re inversely correlated. So the top 10 positively correlated markets, obviously the ProShares Ultra short Euro. We’ve got US-Singapore, US-Israeli shekel. The US-Mexican peso. A number of different markets on the inverse side of that.

We’ve got Korea Electric Power, a number of different stocks, New Zealand-US. The New Zealand dollar futures contracts, Aussie and essentially what this means is that if the dollar were to go down, these currencies and these particular stocks would rise. But if the dollar continues to advance forward, these stocks and these futures would continue to move lower. Now I can also break that down by looking at yearly correlations, I can go to quarterly correlations and that grouping will change somewhat. We can see now US-Swiss franc is in there. We can see NRG Energy is very positively correlated to the U.S. dollar.

BMO and the S&P 500 Index, there’s an 89% correlation. These are the things we want to look for in our trading, but the main correlations as we’ve discussed over the last several weeks is that the one we really want to watch here, guys, is gold.

Gold

Now, if we look at gold contracts and do a comparative analysis to the Dollar Index, we can assess that this push lower was obviously created largely by that retail sales number on Friday. But we were unable to break down below the T cross long at 18.06. The market stopped dead in its tracks rate at that particular level.

Gold

Now our medium-term crossing, our long-term predicted difference is becoming problematic because we have a verified resistance high sitting at the 18.17 mark. I would prefer that we get back up above that level very quickly. Now, you’ll also remember going back several weeks ago as this is an outlook, not a recap of something that’s already happened. When we look at this, I had discussed this several weeks ago that the market moving above this predicted moving average by itself, there is virtually no lag in a setup like this.

So as soon as the market crossed over, that highly effective VantagePoint predicted moving average, that was a warning sign that basically gold shorts are very risky down here. Gold is proceeded to move from the 1760 mark all the way up to 1834 this week, but then we’ve got hit with that very positive retail sales number out of the U.S. sending gold back down a little bit. But again, we must break down below 1800 to take the pressure off the upside here. Because again, the dollar has been unable to clear that 90 to 80 mark, but if it can and it can close above 90 to 80, that is what will ultimately put pressure on gold to the downside.

Now we have closed ever so slightly below that blue line, but again, it is Friday trading here, guys. I’m looking for gold to hold its ground and start to recover again by Tuesday or Wednesday. Now I did mention I did get a question last week in last week’s presentation about the inner market correlations with U.S. treasury bond. So if we look at the treasury bonds, we can see here that we’re holding above that key level 161.21, we’re holding on that key level.

U.S. Treasury Bonds

But if we look at the highest correlated markets to the U.S. treasury bonds, I’ll go in here and pull them directly. And you can see that you’ve got the ultra U.S. treasury bonds is 99.63% correlated the iShares Barclay 20+ T bond 99.05% correlated.

U.S. Treasury Bonds

iShares iBoxx investment grade. Again, you can see these markets here that have an extremely high correlation. Now you also have about 11 markets in here where there’s a correlation, but it’s not as strong. So what the software or the AI is doing is pulling the highest, the top 10 and the top 10 inversely correlated. So we can see both, because again, that points to other trades. So essentially if those treasury bonds go lower than M&T Bank is likely going to go higher, Tyson Foods will probably go. There’s a 91.6% chance that Tyson Foods is going to go higher. A lot of people would probably say, “What do bonds have to do with Tyson Foods?” But this is the advantage of using artificial intelligence. It can go find those inner market correlations for us.

And then again, multiple trades could be spinning off. The stock trades could be spinning is if those treasury bonds go lower. Casey’s General Store, 91.94%. Alaska Air Group at 92%. These are the things we want to look for in our trading, guys. So essentially if those bonds were to start moving lower, the markets that I just showed you would likely to a degree of about 91% would reverse and start going higher. Very, very interesting stuff when we know what to look for. Now as we move into stocks next week, we’re looking at another sell-off. This is going to spook the market thinking the fed is going to raise rates, but he’s been pretty clear that he’s not going to. Everything is transitory with this particular fed. And he’s a bit of a stubborn one.

S&P 500 Index

So right now, personally I don’t think I would panic here. We can see that last week we had a scare here on the S&P 500. It came down to the T cross long to the number at 42.85 and bounced and went all the way up here to almost the 4400 mark. So again, I don’t think I would panic, guys, unless we get these predicted differences moving below the zero line, the RSI below 40. And again, I always do like to apply a two-day rule where if this really is a trend change, we need to close below that T cross long at 43.24, at least in my respectful opinion, two days in a row to get that confirmation. A lot of false signals can happen around a key support level. And again, we want to be very, very cautious.

S&P 500 Index

Now that gold’s backing off a little bit too, that may be another indicator that stocks are just ramping back up for another move. So again, the market’s very panicky it seems, but on Friday you’ve also got a lot of profit taking that can cause a bit of a false price. Now with stocks, if stocks are able to recover, then we would also look to the inner market correlation to follow. Then that of course is going to be light sweet crude oil.

So if we get those stocks turning around, then we could see oil very quickly turn around also, we’re sitting at a verified support zone here, a medium-term crossing the long-term predicted difference is trying to form right now. I believe that this is an early warning sign that gold is going to bounce off of this, just probably below this 70 level. Now we’ve closed at 72.45, but a very strong, verified support zone sitting at 70.27. We would look for that to hold. If we break that, we would have this additional move down to the $69 mark. But again, I believe that oil will hold these two or three verified, these main two verified support zones are likely to hold, but we need stocks going higher. The inner market correlation again has virtually zero lag.

Crude Oil

Crude Oil

If stocks turn higher, then oil will likely follow. That is the one you want to make sure you’re keeping a very, very close eye on. Now, as we look at Bitcoin again, going into this week, my view has not changed on Bitcoin. Again, I’ve been involved with Bitcoin for many, many years now and there’s a lot of noise out there in the market that Bitcoin’s a scam, Bitcoin’s this. I would advise to take that with a grain of salt because the annualized returns over a 10-year period on Bitcoin are substantial. They’re actually the top investment, I believe at about 230% on a 10-year annualized return basis. So this could be a very, very good buying opportunity in dull summer months.

Bitcoin

I’m not expecting any big move in Bitcoin probably again not until closer to September, probably just going to kind of wander around. But as long as it’s above the 28,900 mark, we’re above that yearly opening price, then Bitcoin is very much still alive. If nothing goes straight up and nothing goes straight down. We’ve had a massive move up to this 61,000 mark. So a retracement lower is perfectly normal. The key VantagePoint levels we want to watch for next week is to see if we can get back up above 33,467.

Bitcoin

But I think the market will likely … Bitcoin against the U.S. dollar will likely stay in a range between 28,000 and probably about the 35,000 mark until we get into, again, closer to September, but the indicators are basically running flat. You can see we’ve been running along this lower end of this channel coming down into this 30,000 mark. I don’t believe that’s going to really change much, but again, monitor that level around the 28,000 mark. Now, as we move into some of our Forex trading for this week, once again the Euro not having too bad of a week, but we still are unable to get above this T cross long that now is 118.67.

We do have the ECB coming up this week, which is extremely subjective in my respectful opinion. They could say anything so it could send the Euro screaming higher, or it could send it screaming lowers. So I would imagine we’re just going to have position adjustments prior to that announcement, but no major shift I don’t think unless we get a big spike up or down on gold. 90% of the time, the Euro is going to follow that inner market correlation with gold. Now on a quick side note here, because the Euro is the number one traded Forex pair, that is worth a closer look or what we’ll call a deep dive into this.

So on a yearly basis, the top inner positive correlation, obviously the Euro futures contract, that’s kind of a no-brainer, but you’ve got some individual stocks. You’ve got the New Zealand U.S. dollar, New Zealand futures, Korea Electric Power, we saw that with the Dollar Index, it had an inverse correlation, but it’s a positive correlation to the Euro. We know that the Euro was 100% inversely correlated to the dollar or the Dollar Index. So you can see how this Korea Electric works its way in here.

Euro versus U.S. Dollar

So if the Euro does go higher than this particular stock, Imperial Metals, the CIG, these stocks are likely to go up with it. Now, if the Euro sells off, then we have the opposite side of that. We’ve got ProShares Ultra short emerging markets, Aaron’s individual stock. You’ve got a series of U.S. dollar payers Singapore, Swiss franc. The Dollar Index itself is shown up as an inner market correlation when we lift the hood up a bit on a year-over-year basis. Now again, I can move that into the quarterly and to the monthly correlations, but the yearly is the most stable. In my respectful opinion, these correlations they go away briefly, but they always come back on the longer term basis.

Euro versus U.S. Dollar

So when we look at these markets it is absolutely worth a look here. When we look closer under the hood of this with the Forex pairs, you can see that this is what an artificial intelligence or neural networks look at, these additional markets. They take in Forex, ETFs, futures, and stocks, all of these ones. We can click on that on the futures side. We can see the positive and inverse correlations, the stocks, ETFs, whatever we want to look at or whatever we ask of the AI it will in turn give us an answer. We just want to be able to more communicate better with the artificial intelligence so we can go and find these things.

So right now, the AI has clearly stated that the Euro is weakening. It’s weakening again. So when we look at our key blue line, our predicted moving average by itself, you can see we’re trying to get up above this blue line, but we are really struggling. So to start the week, our two main resistance points are 118.18 and 118.67, the T cross long. We need to clear that. And I would love to see these predicted differences moving above this zero line. But as you can see the market or this particular pair has been virtually flat the better part of the week, very little movement as we move into summer trading.

British Pound versus U.S. Dollar

Now, when we look at the pound dollar, again, the pound dollar more or less following the Euro, I would argue it’s a little bit stronger than the Euro at times depending what’s happening with the Euro-Great Britain pair. But this absolute very, very stiff resistance provided to us by the VantagePoint AI software, more specifically the T cross long. We’re getting all tangled up in this thing and it just simply can’t push through it. And that’s why I’ve always said, I like to use a two-day rule only on a close.

Intraday trading, guys, intraday nonsense, just disregard that. We’re looking whether we can close above or below a certain level and it just simply hasn’t been able to do it. So we’re above the yearly opening price at approximately 136.50. We need to hold these support levels. Because again, the closer we get to the end of the month, the more likely it is we’re going to see some dollar buying. But right now, again, that T cross long coming in at 138.65, that is the level that we need to get back up above. The initial level, though, we can see using the actual predicted moving average by itself is 138.22. So if we can push above 138.22 and again, close above it for at least a couple of days in a row, then we have a better chance of this thing turning bullish again.

British Pound versus U.S. Dollar

Ultimately I believe it will, but the other inner market correlation, again, we always want to keep an eye on is oil. There is an unusually high correlation between stocks and light sweet crude oil and the British pound. So as you can see, light sweet crude oil shows up in here, so does the U.S. treasury notes, the Dollar Index, natural gas and gold are all tied into this British pound. If you want a cheat sheet for this, oil is the one to watch. Oil recovers, that is definitely going to be a positive for both the British pound and the Canadian dollar.

So again, if we can get above 138.22 and we get oil prices rising, my concern here for that is that we have the medium-term crossing the long-term predicted difference with the neural index and a breakdown on the RSI. This signal is very seldomly wrong. When these three signals are combined together, usually you’re going to have bigger pushes coming. So we’re looking for maybe one more push to the downside on the pound. And then we hope that … Not hope we would expect it to start to recover. Because again, hope is not a strategy, guys.

Now as we come into the additional pairs last week and over the last several weeks, building that foundation in our inner market correlations, I also discussed what would happen when gold went higher. I specifically stated that three pairs mainly would be affected. The Euro would go higher, the yen would strengthen and the Swiss franc would strengthen. So U.S. was franc going lower, US-Japan going lower. There is real science behind why that happened, guys and that science is inner market correlations.

U.S. Dollar versus Japanese Yen

So gold, if gold starts going down, if gold cannot hold the levels that I discussed, then the dollar yen will reverse back to the upside. But if gold is simply correcting lower on that stronger U.S. retail sales number, then the dollar yen will continue its decline here. Now we’ve come up and hit that T cross long. That’s why it’s very important to know your levels, guys. 110.29. That’s the line in the sand for us. If we can get above that level, close above it and gold starts pushing down below 1800, then the dollar yen will be an excellent long trade. But if gold continues to advance, the dollar yen will continue to decline.

U.S. Dollar versus Japanese Yen

Now we have a medium-term crossing the long-term predicted difference, but the neural index is not in agreement. So we want that neural index in agreement. And I prefer it when that pink line, the medium-term difference measures the strength of the medium-term crossover. So I like to see that up above the zero line before I really start to bite on these longs. But again, guys, keep a very close eye on gold contracts because they will ultimately determine the direction of this pair. Now, as we look at the three main equity/commodity-based currencies before they in the years past, they were strictly commodity currencies.

U.S. Dollar versus Canadian Dollar

These are clearly equity-based currencies, the Aussie, the New Zealand and the CAD, they all react to the stock market going higher. Meaning US-CAD lower, Aussie-US, New Zealand-US higher. So if that S&P 500 can hold the level that I mentioned, and we get through Monday into Tuesday, Wednesday trading, S&P 500 is recovered, then US-Canada would likely fail at this verified resistance high at approximately 126.53. But remember, the yearly opening price is sitting at about 127.13. US-Canada is not bullish on the year here, guys. If you bought US-Canada during this, you’ve actually been losing money.

U.S. Dollar versus Canadian Dollar

So we’ve got to get back up above that yearly opening price to actually fully confirm that this pair is turning more of a long-term bullish signal is forming. I don’t believe we’re there just yet. Our medium-term crossing our long-term predicted difference right up near that verified high, that’s 125.90. And you can see we’re trying to close above that, that one’s too close to call here. But remember, US-Canada is notorious for reversing whatever it does on Monday. So if this thing goes screaming higher on Monday, the probability on Tuesday, it goes the other way.

Australian Dollar versus U.S. Dollar

So once again, watch your inner market correlations here. If you’re watching this video and you’re not a Forex trader and you’re a stock trader, or you’re a Forex trader, and you’re not a stock trader you’re both trading currencies, guys. The Forex guy is trading stocks and the stock guy is trading currencies. You guys just don’t know it, right? So if the S&P and oil recover, that will again put downward pressure on this payer almost immediately, I would argue the Bank of Canada this week still had a hawkish tone in the rhetoric. But oil prices, again, the Bank of Canada should have sent this payer considerably lower, but the inner market correlations trump that, guys.

Australian Dollar versus U.S. Dollar

With oil price is going down, the equity markets more specifically, the S&P 500 going down, that was too much for the Canadian dollar, the inner market correlations reign supreme in the end. So keep an eye on a reversal on those two aforementioned markets because if they reverse, so will this. The exact same thing would apply to Aussie-US and New Zealand-US. So we’re pushing down below this support level, but if we can get back up above that low of 74.10, then we could see a reversal point.

Now, again, when we click on our F8 in our software, we can get very close to price action using the long predicted by itself, 74.37. That’s the key level. If we close above that, we can get back up above that. Stocks and oil recover, then you’ll see the Aussie start to come around. It will turn back up. The same thing will apply more specifically to New Zealand. I would argue New Zealand. I have argued this past week that New Zealand is the stronger one.

And again, it’s still in trouble here, but not as weak as what the Aussie is, so we could get better value potentially from the Aussie-US pair.

New Zealand Dollar versus U.S. Dollar

New Zealand Dollar versus U.S. Dollar

But it’s a very, very similar trade. So again, if we can get a bow back-up above the T cross long at 70.08, then that would trigger a likely reversal. Our predicted differences, all three of them are stacked up along the zero line. The neural index is positive. We’ve got a reverse check mark on the RSI, guys.

I think anybody who’s watched these videos of mine for any length of time, you’ve seen that before and that usually points to a reversal in the opposite direction to the upside. So we do have a busy week ahead of us next week with the ECB, more financial data, but still some very good opportunity before we get into August trade. So with that said, this is the VantagePoint AI Market Outlook for the week of July the 19th, 2021.

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