VantagePoint AI Market Outlook for the Week of October 12, 2020
U.S. Dollar Index
Hello, everyone. Welcome back. My name is Greg Firman, and this is the Vantage Point AI Market Outlook for the week of October 12, 2020. Now, to get started this week, we’re going to begin where we always do with that very important US dollar index, which dictates our equity, commodity, and more specifically, our Forex trading. Now, with the dollar index here, we can assess that I’ve done things a little bit different for everybody this week. I’ve actually drawn trend lines into here, which is actually formed another wedge formation on the dollar index.
Now, when we look at the Vantage Point indicators, we can see that we’re struggling along this T-Cross long line here. That level right now is coming in at or about the 93.60 area. Now, our predicted differences breaking down below the zero line. My only concern here for further US dollar weakness is our medium term, our pink line, is crossing our blue line, but the neural index is still down.
So we want to watch that neural index very, very closely this coming week for any kind of reversal, because as we broke this wedge formation, we still are well within the lower end of this range, which is coming in at 92.75. We would need an absolute breakdown of that level for the dollar to shift into a more significant trend.
Now, with that T-Cross long at 93.60, we also want to check on the predicted moving average by itself. So when we look at the VP level here, we can see that that blue line, by itself, is currently coming in or about the 93.57 area.
Now, when we remove our black line here and use just the blue line, we can see exactly when this particular trend started. When we slip below this predicted moving average, that level there was 94.10. The market then is in constant contact with this blue line on a daily basis, which ultimately led to a bigger move to the downside.
Now, once again, our medium term crossing our longterm predicted difference back here. The other indicator we want to look at, you can see that I’ve drawn a straight line across the 50 level in the predicted RSI. I am not interested in looking at overbought, oversold or anything along that line, I’m looking for momentum to the upside of the downside.
So when the market breaks down, it comes back up, retraces to the 50 level multiple times here, but the break of the 40 level is when the dollar index, the weakness in the dollar index, really started to show momentum. So we’re looking to build on that, but again, we’ve got to be very, very cautious in the lower part of this area, because again, in most cases, the market is only trending 20% of the time, which means there’s an 80% probability we could see a corrective move down around this 93, or excuse me, the 92.60, 92.70 area.
Now, with this push in the dollar index to the downside, that’s again, given gold a move to the upside, the inner market correlation here is very, very important for us to take note. If the dollar is weak, then usually gold will strengthen. The S&P 500 or the global equities, they will start to strengthen on the dollar weakness also.
Now, in this particular signal with gold, again, we’ve got to be very, very cautious at this 1927 high. If gold is going to fail, it’s going to be between 1927 and this upper high limit of 1983. We have a considerable amount of resistance here. So gold is showing signs of life again on the dollar weakness. We’ve broken through the 60 level here on the predicted RSI, which tells me where momentum is building on gold contracts, potentially. Our neural index is in full support.
S&P 500 Index
Now, with the dollar going lower, gold going higher, the S&P 500 pushing higher yet again. Shorts on the S&P 500 this year have been very painful for most, to be perfectly honest. We’ve had a very, very long rally and any move lower has met with very, very strong buy in. Right now, it does look like we’re advancing back towards the all time high. That level, of course, coming in at 35.75. The indicators are somewhat mixed here. Now, we do have momentum here, but the medium term crossing the longterm predicted difference. If the neural index turns red, then we could see a problem with any further longs up in this particular region. We’ve got a lot of things on the go here. We’ve got the US election. We’ve got the COVID stuff.
So a lot of things are happening here. It’s highly questionable whether we can even retest that all time high, let alone break it. So we’ll monitor it closely. But right now, the signal is still strong that it’s going to move higher. But again, be very, very cautious in these rather lofty levels.
Now, we see that oil is recovering. We’ve got the hurricane, we’ve got a lot of things going on there also, but again, light sweet crude oil for the most part is following the S&P 500.
As the S&P recovers, the inner market correlations still seems to be there for the most part, that oil is going to follow the S&P 500.
Now, we’re still within the range here. We’ve been moving back and forth here. If oil and stocks are going to fail, they’re going to likely fail together, regardless of the hurricanes, because remember hurricane season is basically, we’re on a countdown to the end of hurricane season, about 20 days from now.
So again, I’m not anticipating a lot more upside in oil, but we could see a little bit more because if we look at this, we’ve got the medium term and longterm predicted differences. Our RSI is holding above 50 and staying above 60. So we could see a little bit more upside, but I don’t see us getting over the $43 a barrel mark. Now, again, that could go either way, but again, it’s very unlikely.
Now, with the dollar weakness, again, we look for buying Bitcoin on dips. Now, once again, some funny business going on in the UK with the FCA and the FSA, excuse me, banning crypto buying or crypto trading for retail traders. Very, very strange stuff here, guys. Bitcoin is very clearly a solid investment here, and I think all of us should have some kind of exposure to these digital currencies.
Now, right now, we’re pushing through resistance yet. Again, we’ve been moving sideways. Again, guys, don’t get caught up in the intraday nonsense. You look at the bigger, broader trend on Bitcoin, and it’s clearly up. Every time Bitcoin is pulled back into the $3,000, $4,000, $5,000 range it’s met with solid, solid buying, and usually a 200% to 300% return off of those levels. Two, three years in a row now.
So again, when we look at it right now, we’ve taken out a very strong resistance level, but once again, make the inner market correlation here, guys, to the dollar index. If the dollar index does recover off the 92.70 mark, then that would put a bit of downward pressure on Bitcoin. But right now, after breaking through this resistance high, at this current level of 11,171, it looks to be, again, the green light. And we can see in the Vantage Point software that they are very reluctant to put out a sell here. We’re going back and forth in a sideways motion.
Now, if we click on our F8 here, once again, it using the blue line by itself, we can assess that again, that key pivot area, the long predicted, you can see the actual moving, but the long predicted is 10,819. That would be an area that we would look to pick up longs from. Because again, that is a very strong level at the current time, along with the T cross long.
Euro versus U.S Dollar
Now, as we move into our main Forex pairs, once again, using our triple EMA cross as our main pivot area here, we want to look at this from a different perspective, using those pivot areas. Now, our T cross long is 11759. We would be buyers of euros down to this particular level and continue to sell dollars, but we want to keep an eye on gold contracts. And of course, the dollar index.
Right now, there’s a very mixed signal here. Now we’ve got verified resistance, which we pushed above on Friday, but again, Friday is not always a true price. We’ve got our medium term crossing our longterm predicted difference. I take that signal very, very seriously that the Euro may not be as strong as what it appears to be because the medium term trend is weakening against the longer term. So we will keep a very close eye on whether or not that signal progresses, meaning the pink line further crossing that blue line. And additionally, whether the neural index goes from green to red. If we get a solid red in the neural index, that is a very strong warning that the Euro is going to fail again, up in this 119 level.
British Pound versus U.S. Dollar
Now, with the British pound next week, again, Brexit is still there guys, Brexit is not going away anytime soon. It makes the pound very, very volatile. Rate across the board here. Let me be clear about that. Okay. Because again, nothing goes straight up and nothing goes straight down. This is a very significant resistance level at the 130. For me to continue to buy the British pound against the US dollar, two things, I would love to see it hold and stay above 130, first and foremost. The backup levels we have is the T cross long, which is 12914. We want to make sure that we’re not putting stops between 130 and 12914. That would be somewhat of a sucker’s bet to put that because that’s where the brokers like to run the stops and play games with us.
Now, if we look at the long predicted again, by itself, just using the blue line by itself, that long predicted is 12932. So we can very quickly and easily identify where our two main support levels or potential buying points are. We can also use the Vantage Point predicted low, which is 12962. So the entry point would be 12962, 12930, 12915. And then it all stops below that level. That’s the way we would like to, again, look at our Vantage Point software.
Because again, if we’re identifying these key levels, then we can very quickly assess where these levels are. If I remove the black line altogether, as you can see I’ve done here, then once again, when the actual shift in this particular trend occurred right here. The market state below the blue line, then it crossed above the long predicted and it stayed there. And then on a daily basis, it came into regular contact with this blue line.
Now it’s slipped below it and immediately got back up above it. But what I will point out that on an intraday basis, we were only able to close below that blue line based around the spread. So it still looks pretty bullish, but I will concede this pair needs to get moving very, very soon, or the risk is still somewhat skewed to the downside.
U.S. Dollar versus Japanese Yen
Now, with the dollar yen, once again, the dollar under pressure from the Japanese yen, we pushed a little bit higher, but then down we go again. So right now to start the week, 10564 is a very big level. We’re closing basically right on that level. I would think that the initial move would be to the downside, but we still have to be a little bit careful here because we’ve got support down to 10494, and we still remain well within the overall range.
Now, again, if we modify our RSI and put it to a 60/40 split and put the RSI period to a nine, then we get a quicker signal here. But again, a lot of people using indicators like Mac D, stochastics, RSIs, CCIs for overbought oversold. This is not that type of market guys. This is the type of market that is based around algorithmic trading systems, inner market correlations. And again, momentum is what this market is. So we want to gauge momentum. Are we above or below 50 or are we breaking below 60 or 40? A breakdown below 40 would signal that the dollar yen is going to make another run at the 104 level.
Now, as we look at our three main equity-based currencies, which is the Canadian, the Aussie and the New Zealand, they’re all very similar. They’re all in full rally mode against the US dollar, when the S&P 500 is going higher. This is the key inner market correlation that you want to be aware of here, because again, a lot of people will use different indicators, Elliot waves, Fibonacci’s, all kinds of wild wacky things, which is good, and which is fine, but we must look at these inner market correlations because regardless of the Canadian economy, the Aussie economy, the central banks, these currencies are following the S&P 500. That’s the inner market correlation that you want to be aware of. Right?
So as the S&P 500 rallies, the Canadian dollar rallies. Now, the Canadian did have, the Canadian unemployment went down a little bit. The unemployment, or the employment rate was slightly better. More jobs created the normal. But just be aware, guys, that I am domiciled in Canada and we’re about to go into lock downs again here. Getting dangerously close. 28 day restrictions went back on Toronto, on Ottawa, region, which is not far from me.
Canadian Dollar versus U.S. Dollar
That is not a positive for the Canadian dollar, and it may not be a positive for the equity. So we’ll see how this one plays out. But right now, we are overextended on the downside and we do have a major support level low at 13128. So 13128 is the level you want to watch here, guys. If we click on our F8, once again, when we load this from default, you can see that I can change my software here, and then I can load from default, hit apply here, and that gives me the blue line by itself. That key pivot area, if you’re going to enter the short, I strongly recommend you wait for a retracement to the 13231 area. Then we reassess at that particular time, keeping a very close eye on the S&P 500.
Australian Dollar versus U.S. Dollar
The exact same thing, guys, would apply for the Aussie, US and New Zealand, but in reverse, because the Aussie is not the quote currency. It’s the base currency here. On the US Canadian pair, the Canadian is the quote currency. On the pair, on the right-hand side of the pair.
So when we look at this, the Aussie, we’ve got good support at 7173. We would continue to stay long while that particular area holds. The same thing would apply to New Zealand. I’ve often argued that if we’re going that Aussie. US and New Zealand, US is the same trade, but there’s a slightly better value maybe on the New Zealand US dollar versus the Aussie, because it’s been lagging some of these big move with the equity market.
New Zealand Dollar versus U.S. Dollar
So right now, once again, if we click on our F8 and excuse me, and we look at the blue line by itself, that long predicted pivot is 6621. That’s an excellent area to start to look for longs starting the week. The predicted low is 6628. So when we match the blue line to the Vantage Point predicted low, we visually see an entry point, a very solid entry point for potential longs.
But again, remember, the correlation to the S&P 500 will dictate whether the Aussie or the New Zealand go up or down from here. So keep a very close eye on the S&P if you’re trading the Aussie, the New Zealand and the Cad.
So with that said, this is the Vantage Point AI market outlook for the week of October, the 12th, 2020.