VantagePoint AI Market Outlook for the Week of May 11, 2020
U.S Dollar Index
Hello, everyone and welcome back. My name is Greg Firman, and this is the VantagePoint AI Market Outlook for the week of May the 11th, 2020. Now, to get started this week, we’re going to begin where we always do with that very important US dollar index. Now, just a little bit of a recap, I won’t go through every single pair, but looking at last week’s presentation, and again, this is an outlook. It’s not a review of something that’s already happened. We’re only reviewing it now to clarify some of the points. Now, in last week’s weekly outlook, I had talked more specifically about cycles in the dollar, periods in the start of the month when the dollar is strong and when it’s weak.
When we look at last week’s trading from Monday to Thursday where in last week’s presentation I also mentioned that Thursday is the new Friday, we have profit taking on Thursday, excuse me, so we want to make sure that we’re getting out of these trades or making sure we’re taking profit. As we can see, we have a four day rally in the dollar only for it to end on Thursday. Now, the payroll number obviously very weak, but that’s not a number that we’re going to give a lot of credit to, obviously with the global economies on lockdown. But if we’re looking at buying dollars at the start of this past week, the dollar went up 1.4% on a single contract, $1,390. These are the things we want to look at.
Now, again, going into this week, we would look at doing pretty much the exact opposite here, guys. What I had stated last week and I’ll state it again this week, in most cases on the Tuesday after the nonfarm payroll number, the dollar mysteriously sells off when real money demand dries up. I would be keeping an eye out on that very, very closely. Now, how that if the dollar sells off as we would anticipate, then gold would continue to start its rally again probably by Tuesday, Wednesday of this coming week. When we look at this right now, we’ve got our key level at again 1708. We’re closing at 1713, but buying down off these verified support zones has been a very, very good play this week.
Now, how that if the dollar sells off as we would anticipate, then gold would continue to start its rally again probably by Tuesday, Wednesday of this coming week. When we look at this right now, we’ve got our key level at again 1708. We’re closing at 1713, but buying down off these verified support zones has been a very, very good play this week. You can see that we’ve got excellent support down to 1676 and additional support down to the low of 1666. Anywhere around this area would be a target area for potential longs. If we’re going into a period of known dollar weakness in this coming week, then that would make gold look far more attractive than what it usually does. Now, the other thing we want to look at is, of course, equity markets in the VantagePoint software and inner market correlations. I’ve made the strong argument time and time again that it is not the euro that is correlated to the S & P, but rather the US dollars. As the dollar had a very good week, so did equities. You can see that we’re banging against this VantagePoint…
The long predicted and the T cross long hitting both of these levels and recovering from that. Now, my only concern here is that if the dollar does sell off next week that that could hurt the equity markets too. We’ll continue to tomorrow monitor this inner market correlation, but for now, as long as we’re holding above 2885, then a continued move higher in the equities is a reasonable play. Now, oil has recovered this past week, but once again when we look at this recovery, I anticipate that this will be very short lived. We can already assess after this move up that we’re hitting a considerable amount of resistance three days in a row, and then on Friday we started to pull away from this particular level.
That resistance on oil is coming in at or about the 2780 mark and I don’t anticipate that level to be breached any time soon because again, remember, nothing has really changed. Even if all the global economies get up and running, there’s still going to be limited demand here. We’ve got a huge supply glut with oil. If we’re talking about things that are supply and demand based, then again, supply is high and demand is low. We can see our medium-term crossing, our long-term predicted difference is starting to verify that. When this pink line crosses this blue line, that’s when we want to look to execute these particular trades.
I often get questions regarding Bitcoin, and I believe that Bitcoin is worthy of adding to the weekly outlook because I’ve been a very, very strong advocate of Bitcoin despite what some of the major market pundits like Warren Buffett and these people have said. The bottom line here, this is once again a fantastic long trade on Bitcoin in this recovery, coming down off this low area of 6828. We’ve had a very strong rally. Now we’re hitting, again, you can see three bars all stacked up against the verified resistance zone. We’ll continue to monitor this, but the fact of the matter is once again this year, just like last year, guys, Bitcoin has rallied off that 3,200 mark all the way up to 10,000. This has been, again, during the COVID virus and everything else. his has been one of the top investments. Be your own man or your own person. Don’t let somebody tell you what’s good or bad. I’ve listened to Warren Buffett and I wholeheartedly disagree with everything he has said regarding these digital currencies. Obviously we have people buying this and that’s all we want to look for is for that type of thing. Do we have people that are actually buying things? Again, if we can break through this level at 10,000 and stay above this, then we could see Bitcoin continue to advance. We’ll continue to monitor this right now. But if we look at our F8 on our VantagePoint software, this would be if we were short selling, this is what we would look at. If we look at our T cross long at 9,500, if we break down below and close below 9,500 for at least one or two days in a row, then that would trigger that we’re going to see profit taking. We’ve had a full retracement back up and again, a very, very solid trade despite what some of these pundits are saying and an excellent call on the VantagePoint software.
Now, when we look at the euro, again, the euro makes up the bulk of the dollar index. When we talked about this last week, I suggested that the euro would not advance and that it would fail. That’s exactly what it did. We’ve looking at a 1.9% move down. 210 pips based around the VantagePoint medium-term crossing the long-term predicted difference that led to on a single contract $1,940. We see why the the Forex market is the biggest market in the world because if you’re running five contracts in four short days, you’re talking $9,700 here, guys. Here’s where we’re at now with the euro. We’ve come off that weakness, but again, in most cases, if that dollar index turns down, the euro can only turn one way, guys, and that’s up. We’ll continue to monitor this, but in my respectful opinion, looking at these verified support zones down around 107.72, this looks to be a reasonable long trade. Our predicted RSI is starting to recover. Our neural index has turned green. All of these are warning signs that we’re going to be going, again, higher, not lower.
Be careful about Monday trade because Monday is a reversal day, meaning that whatever the price does on Monday, it often does the exact opposite on Tuesday. Now, when we look at the US-Swiss Franc that mirrors the dollar index, again, I won’t go through every pair, but just to give some idea, places – value to actually buy dollars last week based around that dollar cycle and the predicted indicators in VantagePoint, more specifically, the neural index in the medium-term crossing the long-term predicted difference. Now, with the predicted RSI, I use it very differently. I use a 60-40 split. I’m not interested in overbought and oversold signals or accumulation
U.S. Dollar/Swiss Franc (USD/CHF)
I’m only interested in gauging the momentum against the inter-market correlations. When I look at t
his, I can see that break of 60. It tells me that I’ve got momentum building here. Single contract up 1.77% or $1,749. Again, we see on Thursday, Thursday is the new Friday here, guys. On Thursday, the price just reverses. Now, going into the nonfarm payroll, that’s perfectly normal because the bulk of us that knew the dollar was going to be strong this past week, we wanted to close out and take profit and not give that money going back into the nonfarm payrolls. Again, a nice move up, but for this coming week, if we have a cycle of dollar weakness after Tuesday and on, then we would look to sell the US-Swiss Franc up into these verified zones towards the 98 level.
British Pound/U.S. Dollar (GBP/USD)
We can assess here the same thing on the pound-dollar. When we look at the pound, the euro, make up a big part of that dollar index, so does the Swiss Franc. Not as big as the euro, but still large enough. Single contract, the pound goes down 248 pips on a single contract. That’s two grand, guys. It’s a very, very nice trade. We hit a VantagePoint verified support zone on the Thursday, and then we have a reversal. For this coming week, we want to look to break above these two levels, the T cross long, which is 124.11, and the long predicted at 123.97. Again, if we’re holding above these two levels, we would be looking to buy the pound-dollar, not sell it next week. Our neural index going from red to green, everything looks very good for a long trade coming into Tuesday of next week. Now, with the dollar-yen, the dollar-yen is, again, just setting these little minor support zones and it’s just inching its way down. In my respectful opinion, one of the best ways to play this is on a break of 106.72. Now, again, the yen is still one of the stronger currencies in the Forex market, so buying dollar-yen is a little risky in this channel. We’ll continue to monitor this. But in my respectful opinion, we’ve made another small leg down, but we’re not making another leg up to the upside. Shorts, slightly favored here, but this is the signal here. I would be cautious of, guys.
U.S. Dollar/Japanese Yen (USD/JPY)
The medium-term crossing the long-term predicted difference with that neural index usually tells me that we could be getting ready to go higher on the dollar-yen at least in the short-term. Now, with the Canadian-dollar, once again, the Canadian dollar moving sideways in this channel. Once again, we’re in between this 138.50 and we’ve got this upside resistance that’s coming in at or about the 142.64. Long traders, if you’re going long on US-Canada, we want to make sure that we’ve got our neural index in agreement, which it’s not at the current time. We want oil prices and equity prices staying up. If they sell off, that will actually hurt the Canadian dollar and benefit the US dollar.
U.S. Dollar/Canadian Dollar (USD/CAD)
The US-CAD is nothing like some of the other pairs like euro-US, pound-dollar, US-Swiss Franc, dollar-yen. US-CAD is its own animal right now, and the Canadian economy is in significant trouble here, turmoil. We’ll continue to monitor this, but again, our RSI is breaking down below 50 and below 40, which suggests momentum is building to the downside. Now, with the Aussie and the New Zealand for next week, very similar trade here, guys. It’s been bouncing around all over the place for the better part of the week, but there is an underlying movement happening there. You can see that we’ve come all the way down, kissed the VantagePoint T cross long to the number, not one day, but two days in a row, actually three, and now we’re starting to advance higher.
Aussie/U.S. Dollar (AUD/USD)
Now, if the global stock markets can continue to advance, then so will the Aussie and so will New Zealand-US. These will be decent trades. Our neural index is positive. Our RSI is advancing, so everything looks quite good here as long as we’re holding above 64, 65. But again, the Aussie-US and the New Zealand-US are very, very sensitive to the global equity markets or the risk on, risk off. If you know these key levels, you can play these levels. Once again, if you come down and we use the blue line by itself, we do have a two day confirmation of closing above the long predicted, which suggests we’re going higher. The problem is, guys, we’ve got these two very stiff verified resistance zones. The first one we’ve got to break through is, again, 6478.
New Zealand/U.S. Dollar (NZD/USD)
If we can break through that, then we would go to our next verified zone, which would be 6684. I think it’s reasonable that that could happen, looking at the neural index and the predicted differences. The exact same thing is going to apply to New Zealand here. A lot of people, I’ve seen them, they’re trading Aussie-US long and New Zealand-US short. That doesn’t make a lot of sense, guys, because the trade is virtually identical. Right now our long predicted 6079, our T cross long at 6052. This is where all of our support resides. We would prefer to buy off one of these two particular levels and be very, very cautious with this verified resistance zone that’s coming in at 6174.
But again, our predicted differences, our neural index, and our RSI are all saying that both the Aussie and the New Zealand, at least in the short to medium-term, are going likely higher. With that said, this is the VantagePoint AI Market Outlook for the week of May 11, 2020.