VantagePoint AI Market Outlook for the Week of July 27, 2020
U.S. Dollar Index
Hello everyone and welcome back. My name is Greg Ferman, and this is the VantagePoint AI market outlook for the week of July the 27th, 2020. Now to get started this week again we are going to begin with the US Dollar Index. The dollar under heavy selling pressure for a number of reasons, the increase of COVID cases in the US, we’ve got tensions between the US and China which are escalating, putting pressure on some of our other trades like the S&P 500 by fueling gold rallies, but also causing the dollar to come under significant selling pressure which is a little bit odd considering that dollar is often used as a flight to safety currency. But the benefactors here have not been the Dollar, but rather the Swiss Franc and the Japanese Yen, which we’ll look at here shortly.
But for now, when we look at the dollar, just remember here guys in trading, often confusion in trading is that markets can go straight up and go can go straight down. 90% of the time, that is not the case. We have a massive support low coming in at 94.47. Now the dollar is trying to break down below that. We have closed pretty much right on that level. So in my respectful opinion, if there is a bear trap being set up, it’s going to be somewhere around this particular level on the dollar between, again, this swing low prior to the COVID, again, that low coming in at 94.47 and we have additional support down to about the 93.65, 93.70 area. So at this particular time, we first and foremost in our trading, want to make sure we identify that this chart is not just a free run.
There actually is a verified support level there that very well could hold. The event risk for this week, of course, is the FOMC on Wednesday, definitely a wild card here guys. The dollar is likely to remain under pressure until we hear what the fed has to say. But it’s also highly possible that the dollar reverses shortly thereafter in a buy the rumor, sell the fact type of case. The fed, again, is always a wild card. We don’t know specifically what they’re going to say. When we look at our additional indicators from VantagePoint, our neural index is firmly down. Our predicted differences are down. Mac D is pointing down. The RSI is a little bit concerning here though. And the RSI is sitting at 4.9, grossly oversold. Now we’ve seen this before. And again, just to point this out, just because something is oversold doesn’t mean it’s automatically going to reverse.
Trading off of overbought or oversold, these types of conditions are rarely profitable, actually. So we look at the main indicators to tell us when this is getting ready to turn. So for this coming week, we will watch a couple of key levels. Our T cross long at 95.82. When we click on our F8, which is our blue line, our predicted moving average or the longterm crossover without the black line, just the blue line, you can see how incredibly effective this actually is. Where you’ve taken the correlation to 31 other markets and put it into this blue line. You can see that it’s a very useful pivot level. So that level now is 94.98. In my respectful opinion, regardless of what happens the rest of the week, we will come up and test this particular level. Now, with this dollar weakness, the gold contracts are just absolutely soaring here.
Not surprising. We’ve been buying gold, particularly in the VantagePoint live training room. We’ve been looking at longs on gold since actually last year, when everybody else was saying, don’t buy gold, don’t do this. And this was back in, you know, way down here. If we look at this a year ago, even just from January of this year, once again, with gold down here, opening the year in and around this 15, just about the 1500 mark. And now we’re sitting at 1900, just an absolutely fantastic trade here. But as you can see, like any other market, you have the ups and downs, nothing goes straight up and nothing goes straight down guys. It’s very important to understand that in your trading and not to panic on a pullback.
The key thing you want to look at it with something like gold, if you’ve missed some of this rally, then you’ll look at your main pivot areas. You’ve got 18 26 13, which is our T cross long. But again, if we use the blue line by itself, we get a very effective entry point on a day over day basis, week over week basis. And we can gauge the strength of the market. So we’ve got 18 63. That is your retracement point to start the week. I believe that gold may come down a little bit lower either just before the fed or just after the fed. So these are the levels you want to watch. Right now, the predicted differences, you can see that the RSI at 94, all of these indicators are grossly overbought, but that did not stop the market from moving higher. And this is what we need to understand. That conventional indicators, overbought, oversold, accumulation distribution, again, we’re telling the market to stop going higher and go lower when we trade off an overbought condition.
Trust me, the market is not listening to that type of technology. So we want to make sure that we’re utilizing the key VantagePoint indicators, the neural index, the predicted difference. So if the neural index is to turn red, then that could be a warning sign that we’re getting to retrace, but we’re not there yet.
S&P 500 Index
Now with the stock market, with the S&P 500 this week, again, we’re starting to put a bit of a top in here again. But I’m also seeing a clear pattern with this thing is that it’s good at the beginning of the week, bad at the end of the week, in most cases. So once again, we’re selling off, but when one really looks closer at this, again, a strong argument can be made, and a lot of people on Wall Street are making this argument, that they have not been buyers of the S&P 500.
So this could be the fed buying it. We don’t know. But either way, when we look at this, we can see that the predicted difference is turning down and when the neural index turn from green to red, this was on Wednesday to Thursday trade, that started to move the market lower. When we look at a leading indicator like the RSI and use it as a momentum based indicator, the way it should be used, we can see that we’re losing momentum on this on Wednesday of last week. Now, again, when we look at that key VantagePoint level, full blown shorts are not going to be effective unless we can move below 31.88 and stay below that. Now the additional level we watch here is the blue line by itself, that key level 3225 we are closing at 3203. So again, the neural index with a number of the other VantagePoint indicators gave a clear warning that we have a problem here.
We look at the 50 level on the RSI and the 40 level on the RSI. If we break down below 40, then we’ve got some momentum building to the downside. But again, be careful about fake price on Monday trading.
Now, when we look at oil and do a comparative analysis to the S&P 500, once again, we see that oil is going nowhere fast here. It is completely stalled. So when we look at this right now, again, looking at the neural index, the predicted differences, we’re just moving sideways here for literally, we’ve been moving sideways, back and forth in this channel, going all the way back to June the eighth. So right now, if the equities start to pull back, we go into a recessionary type trading, oil doesn’t stand a chance up here. So shorts definitely favored here slightly, but I would like to see these VantagePoint indicators, the predicted differences starting to break down below that zero line.
And I would really love to see the RSI below 50 and more specifically below the 40 level.
Euro versus U.S. Dollar
Now, as we move into our main, some of our main Forex pairs, again, the currencies driving factors of the equities and vice versa, the gold is correlated to pairs like the swiss franc. US swiss franc, dollar, yen. We see a breakout on both of those two currency pairs. So the market is slowly been grinding towards a risk off environment here. And the Forex market has given us a warning sign of this. Some of the brokers increasing margin requirements on pairs like US swiss franc, this is again, a warning sign here, right guys. So when I’m looking at the Euro right now, we want to make sure, again, check our ranges. We have broke higher. We’ve broken through that key level, but when we come back and look at this again on a longer year over year basis, we want to see if there’s any additional resistance zones.
Swiss Franc versus U.S. Dollar
And right now the next major resistance zone is up around the 118.50 level. But in my respectful opinion, 90% of the time before we get another big run up, we will have a retracement first. So the key thing to understand is know your levels here. The T cross long 114.23, the dark blue line, and an even more powerful level here. You can see how the market is running along this predicted moving average here, right? That is the correlation to 31 other markets. That pivot area right now is 115.45. So to start the week, we need to hold above 115.45. If we break through that, then we would look at the 114.23 level that, again, that T cross long. Right now, the indicators on the RSI, 95.4, yes, we are clearly grossly overbought on the Euro. That doesn’t mean it can’t go higher, but again, watch your neural index for a warning sign that that corrective move is starting.
But I can say to a degree of about 85% that the market will come down and test 115.45 before the week’s out. And it may actually be as early as Monday or Tuesday. Now, once again, with the US swiss franc, we’ve broken through a major support level here, but again, moving towards a risk off, we’ve got the conflict between US and China, the consulate in I believe Texas closed, shutting down, burning documents. So is the cold war starting back up again? There’s certainly a strong argument to suggest that that could be where we’re going here. But for now, I’m not going to go down that road. We’ve lost this support level. So again, we look for additional support, verified support for a warning sign. And sure enough, when we back our VP charts out using the verified zones that low is coming in at, again, down in this, about the 91.84 level here, I believe, if I’m just looking at that.
So we’ve got 92.35 right there, and we’ve got 91.84. So again, if this is going to reverse, it’s going to be around the 91.84 area. So it’s going to be dependent largely on what we hear from the fed. But watch those levels. Be careful of a bear trap sitting around that 91.84 area. Keep a very close eye again on your neural index. We can see that our predicted difference is starting to flatten out, and it’s actually starting to rise as the market’s going lower. Again, if you know how to use the RSI as a momentum-based indicator, then it’s highly, highly effective. But again, indicators like the RSI stochastics, accumulation, all these things, they need to be used with additional verification from the key or core VantagePoint indicators. When we look at the pound dollar for next week, again, it’s not a free lunch up here, guys.
British Pound versus U.S. Dollar
That’s all I can warn you of. Just like I warned you last week. We pushed higher on the hopes that everything is going to be okay in the UK. I am certainly not in that camp. I think old Boris has his hands full here. When we look at Brexit, the coronavirus uptick in cases. So when we look at this either way, we have a verified resistance high at the 128.12, be careful of this one on Monday and Tuesday for a false break higher only for a violent reversal lower, that key level 126.06. The further we move away away from this key VantagePoint level, the more likely it is we’re going to retrace to it. So again, utilize the blue line or the long term crossover without the, you can use it with or without the black line, it’s your call.
But understand that key pivot level 126.99, in my respectful opinion, much like Euro US, we will come down and test this level within the next 48 hours.
U.S. Dollar versus Japanese Yen
And again, this video being done on Sunday prior to the market open, because again, this is an outlook, not a recap of something that’s already happened here to be very clear. Going into trading is difficult. You’re going into battle here, some people would call it, right? So you need to know your battle lines. You need to know your key levels in order to not get caught in these bull and bear traps. So watch for a retracement back to the 127 level. If we lose that, then we’re going back to that longterm, that vantage point T cross long. Now the dollar yen has taken a big hit this week, breaking through here on the risk off environment.
But again, it’s nine times out of 10, it’s going to be some kind of an announcement that triggers this type of rally. Once again, guys, there is no free lunch down here either. We came down here to a verified zone at 106.08 area. We pierced through there, but you’ll notice we did not close below that level. So if risk sediment continues to deteriorate in the market, then the dollar yen will continue to be move lower. That’s how this works. So we’re going to watch this level very, very closely around 106. Be careful with this pair on Monday also, it often tends to do the exact opposite on Tuesday, whatever it does on Monday. But if the S&P 500 starts moving higher, the dollar yen’s going to follow.
Right now, the neural index is down. All of the main core indicators are down. Once again guys, know your key levels, 107, the T cross long. If we click on our F8, you can see that the market is using that VP level. 106.78 is the current level here. So we look for at the very least another retracement back to that particular level.
U.S. Dollar versus Candian Dollar
When we look at the US Canadian, we’ve got the US Cad, the Aus US, New Zealand US, virtually all the same trade here, guys. So when we look at this right now, this is a classic warning sign here. We’ve had a strong neural index down for multiple days. We broke through a verified support level, but now we have a low here. The low of this particular bar is 133.51. The question will be now, can the US Canada push through that and start to advance towards the 133 level, which would be our next verified zone, 133.16.
So, again, very quickly we can identify these upside pivot areas. We’ve got 135.24, the T cross long. We click on our F8, and again, we’ve got that key pivot area at 134.61. That’s the level we want to watch to see if we can break through. But not only is the neural index turning green, the medium term crossing the longterm predicted difference is also starting to point back to the upside. Our RSI is no longer falling. It’s starting to turn and move higher. I’ve said this before. I’ll say it again. Be careful with this pair also. If it makes a big move down on Monday, chances are Tuesday it’s going higher, potentially for the rest of the week.
Australian Dollar versus U.S. Dollar
In a risk off environment, people do not want the Aussie dollar. They do not want the New Zealand dollar and they certainly don’t want the Canadian.
So when we look at the Aussie and New Zealand, we see the same thing. We can identify a failure point up here at this high of 71.82, just below this dark red verified resistance zone on VantagePoint, which we failed to break above. And now we’re moving lower. The 70 cent mark, watch that level very closely. But if you look at the F8, you can see that again, we always, like a moth to a flame, come back to this key pivot area. That level is now 70.77 guys. So again, if we start breaking down below that you can even put limit orders below that blue line and get ready for a potential short. And again, the same thing will apply to New Zealand. We can see that we’re failing here. If I just draw a line and you can just put it right onto your VantagePoint software, right?
New Zealand Dollar versus U.S. Dollar
You’ve got a double top right there. Doesn’t mean, double top doesn’t mean it’s going lower by the way, that could also be interpreted as bullish. Just to put that out there. But again, know your levels guys. 65.68 on the downside has been a very good long trade off the T cross long. The entire previous week with my own direct clients, we have been focusing mainly on loans last week, but this week we’ll probably start to shift over towards shorts if this level is not penetrated very, very early in the week. The indicator’s starting to go sideways, neural index is down. The RSI is leveling off. So again, the major event risk this coming week is going to be the fed. And I do expect a very choppy week. So with that said, this is the VantagePoint AI market outlook for the week of July the 27th, 2-