VantagePoint AI Market Outlook for the Week of June 1, 2020
U.S Dollar Index
Hello, everyone and welcome back. My name is Greg Furman, and this is the VantagePoint AI Market Outlook for the week of June, 1st 2020. Now, to get started this week, we’re going to begin with where we always do with that very important U.S. Dollar Index, but we’re going to start the week in this presentation a little different.
Now, what you can see as I’ve drawn a series of vertical lines across the screen, which represent the beginning of the month. When we look at and assess this on the Dollar Index, we can see very clearly that out of the last five months, that four of those five months, or 80% of the time, the Dollar has shown strength in the beginning of the first week of the new month until after the non-farm payroll, except for one month right here and that’s largely to do with everything that’s gone on with the COVID virus, the lockdown, et cetera. So once that has basically gone away, then we can see that we start to return to normal again.
Now, the leading indicator for that, of course, is the medium term crossing the longterm predicted difference at the beginning of the month once we’ve bottomed out on price. So, again, we can see this, and even in the month where it took an extra few days for the Dollar to show that strength, the medium term crossing the longterm predicted difference still warned us that something was going to happen. We can see a very clear signal here. Now, what we want to assess from this particular setup in this pattern recognition is we’re seeing the exact same signal forming yet again. What we’re waiting for is for the Neural Index to match the medium term crossing the longterm predicted difference. The predicted RSI is already starting to flatten out here The slope of it, again, we were at a major verified support low that’s coming in at or about 98.34.
Very often, this is what happens is we have a bear trap setting up here. So, in my respectful opinion, based around the analysis done here, there is an 80% chance that the Dollar is going to reverse higher next week.
Now, if that does, then lately gold has actually been following the Dollar, so when we look closer at this right now, gold is recovering. So, if the correlation between gold and the U.S. Dollar is a positive correlation, then both could go up next week. When we look at our major support levels, we have 1731 and 1737. As long as we’re holding above these particular levels, we should go higher. Now, again, the predicted difference is rising, we’ve got our Neural Index turning green with a rising RSI, all of which is telling me not only is the U.S. Dollar likely to go higher, but gold could go higher also if the market turns to are a risk off sediment.
S&P 500 Index
So when we look closer at this, the S&P 500, in my respectful opinion only, is approaching a very, very strong power of what I would call a powerful resistance area in this verified zone between the current price and 3124. Again, in my respectful opinion only, this is likely where the order flow traders are going to come out looking for shorts, looking for value on those shorts. Anywhere between 3060 and 3124, we are likely to see those sellers come out. This is being verified by the medium term crossing the longterm predicted difference. Now, that means the medium term trend is starting to weaken against the longer term trend, which has clearly been up. So, as the RSI starts to roll over, it’s a warning sign, if nothing else, to be very cautious about buying the S&P 500 at these current levels.
The same thing would apply to light sweet crude oil. We can see that oil is up against these very strong verified resistance zone. Our medium term crossing our longterm predicted difference is a little mixed right now. But, again, if stocks start moving lower then oil predominantly follows. So we we’ll continue to monitor these levels, but right now it looks like both are getting ready for potentially a move lower.
Now, how would this affect, again, Bitcoin? When we look at Bitcoin, Bitcoin continues to show resilience here while above this most recent support low at 8201. We have additional verified support coming in at 86.47 and further some very strong support at 8819. But very powerful resistance up here around this 10,000 mark. Our medium term crossing our longterm predicted difference with a rising RSI suggests that Bitcoin does have more upside potential. So buying on dips remains the better strategy, again, in my respectful opinion.
Euro versus U.S. Dollar
As we move into our major currency pairs going into next week, based around the analysis, looking at those patterns in the U.S. Dollar where in the last five months, four of those months, the Dollar has strengthened in the first week of the new month. So when we look at this right now, the Euro is up against a very strong verified resistance zone.
That particular level is coming in at or about 11.46. But again, the question is, can we break through that? It would appear, looking at the analysis and the signal in the Dollar Index that that’s unlikely. Now, remember, there’s 100% inverse correlation between the Dollar Index and the Euro. So if you’re a Euro trader, or you’re a U.S. Trader more specifically, then you want to be watching that Dollar Index very, very closely, because even if it moves lower, the Dollar Index moves higher, forcing the Euro lower, that can produce some very good returns.
I would anticipate that the Euro will start to sell off by midday Tuesday. Monday is always a reversal day so we look for one final push in the Euro-U.S. pair only then to see it reverse Tuesday, Wednesday, Thursday, Friday until next week. So, again, watch these levels when our Neural Index turns from green to red, that will be the trigger for us to get short.
U.S. Dollar versus Swiss Franc
Now, if we’re looking for places of value to buy Dollars, even if it’s just for a week, then obviously the U.S.-Swiss Frank comes to mind too. We have, again, very strong verified support at 95.89. I anticipate they will try and run this support level by maybe 20,30 pips only to see it violently reverse again on Tuesday and Wednesday. So watch this particular level, but right now, our medium term crossing our longterm predicted difference to the upside, once again, looks favorable for long.
So we’ll be watching this level very, very closely and looking for the Neural Index to turn from red to green. Because, again, this is not a recap of something that’s already happened, guys. This is a weekly outlook. It’s forecasting forward, not backwards. So we’re looking for what’s going to happen in the market. So we look at these different patterns. We also look at the indicators in VantagePoint for a signal. We can see that the RSI using a 60/40 split is not breaking down below the 60 level. Another strong warning sign that the downside could be very, very limited here.
British Pound versus U.S. Dollar
Now, as we go into the pound Dollar, the pound Dollar, trying to form a buy signal. But as we can assess here that the market is moving higher but our medium term crossing our longterm predicted different looks set to cross to the downside, so once again, I would anticipate one more day of strength out of the pound Dollar only to see it reverse on Tuesday.
Be very cautious about getting caught in a bull trap between these two major resistance levels. We’ve got one at 1.2362, and we have an additional one, which is very significant up at the high at 1.2466. Selling into the 1.2466 with a confirmation of the medium term crossing the longterm predicted difference to the downside combined with the Neural Index is the signal we’re looking for to short this.
U.S. Dollar versus Japanese Yen
Now, as we look at the Dollar Yen going into next week, we continue to move sideways in this chop. But oftentimes in the week of the non-farm payroll number, the Yen is weaker. So we’re looking for Dollar strength even against potentially the Yen. But if we get into a very strong risk off environment, the Yen will strengthen even if the Dollar does.
So it’ll be quite the battle between these two next week, but longs are very dangerous at this particular level, unless we can break free and clear of 108, 108.20, and stay above this level. Once again, the indicators are not suggesting we are going higher. So we would look here again to sell into rallies at least for another week or so.
U.S. Dollar versus Canadian Dollar
Now, as we move towards the Canadian Dollar, again, we’ve got a very heavy economic docket next week, including the Bank of Canada, which I don’t think is going to be very favorable for the Canadian Dollar. The Canadian economy has been ravaged by not the COVID virus, but more the politicians controlling the economy. So, again, Canada is slowly starting to open, but as you can see, we’ve got a heavy baseline support down at 1.3725. Our medium term crossing our longterm predicted difference with the Neural Index is one of the most powerful buy signals you will see in the VantagePoint software longs are heavily favored.
However, remember what I’ve always stated with U.S.-Canadian pair, that often it fakes the market out on Monday. So expect a move lower on Monday only to see a dramatic reversal to the upside on Tuesday. The Bank of Canada on Wednesday is a wild card, but I don’t think we’re going to see anything new here. I think they’re going to say that rates are going to be on hold. They’re going to be on hold for a very long time, equities move lower. Oil moves lower. None of this is a positive for the Canadian Dollar. So when we look at this closer, clearly buying this around the 1.37, between 1.37 and 1.3750, is a very, very reasonable play.
Australian Dollar versus U.S. Dollar
Now, if we anticipate that the Dollar is going to strengthen, we can also assess here that for the last 44 trading sessions, Australia-U.S. has been banging up against this very powerful VantagePoint verified resistance zone at 0.6684.
We’re looking for this level to either break or hold. The bias here for next week is that we get a single push on Monday only to reverse on Tuesday. Again, if we’re looking for places of value to buy U.S. Dollars, Aussie-U.S. and New Zealand-U.S. could be a very good trade. We can also assess the correlation between the Aussie, the New Zealand, and the CAD, that all three of these run together. So if one sells off, the other two are likely to also. So this resistance here is very formable. We’ve got our medium term crossing our longterm predicted difference, all of this points to a move lower, unless we can make a sustained break of I’m going to round it out to the 67 level, which I think at this particular time is unlikely.
New Zealand Dollar versus U.S. Dollar
However, if the stock, the S&P 500, moves higher, the Aussie will follow, the New Zealand will follow, and the Canadian Dollar will follow. The correlation between these three currencies and the S&P 500 is the strongest I’ve seen in a very, very long time. So if you’re trading Aussie-U.S. New Zealand-U.S., or U.S.-CAD, you’re watching the S&P 500 very, very closely. And again, we can assess that New Zealand is almost identical, if I take just a strict horizontal line here and draw it, we can see by on a price action basis, clear as day, four days, this is telling me there are no buyers here, guys. Our medium term crossing our longterm predicted difference we are simply waiting for the Neural Index to get on board here. When it goes from green to red, that will be the trigger for us to get short.
So with that said, this is the VantagePoint AI market Outlook for the week of June the 1st 2020.