VantagePoint AI Market Outlook for the Week of October 19, 2020
U.S. Dollar Index
Hello everyone, and welcome back. My name is Greg Firman, and this is the Vantage Point AI Market Outlook for the week of October the 19th, 2020. Now, to get started this week, again, we’re going to begin with the Dollar Index, very important right now in our foreign exchange trading, commodity trading, equity trading. The dollar is involved in all of these transactions. When we look at the current position of the U.S. dollar, we have slipped back inside this two-and-a-half-to-three-month range. We’ve had a slightly new high here, where we pushed above 94.79. But again, not enough to entice more buyers into the dollar.
Where the dollar can make its gains is if we move into a risk-off environment, going into the … The closer we get to the U.S. election, COVID cases are rising, this could see the dollar push higher. But again, when we look at this right now, we can assess, as we’ve approached this lower-verified support zone coming in around 92.75, our medium-term crossing our long-term predicted difference warns us that the dollar could be getting ready to move higher. The neural index then confirms this. When we look at the position of the predicted RSI right now, you can see that I’ve drawn a small trend-line in here. Again, a very infamous reverse-check-mark here, where we’ve broken above the 60 level, only to turn around and slip below it. Again, this resistance area here, there is just not enough buyers for the U.S. dollar. Again, the dollar’s had a decent week. Don’t get me wrong. But for now, it still appears to be corrective in nature. We would be looking for a break.
The immediate break right now would have to be above the 94 level, but at this most recent high, at the 94.79 level, is really the area that we need to break above.
Now, gold continues to consolidate as the dollar does. Now, gold is having trouble making a push one way or the other. We’re getting all tangled up around this VantagePoint TCross Long at 1910. So, any Longs up here, it would be advisable to take profit on your trades here, guys. Because again, we’re just moving sideways in a broader channel. And this is what a lot of traders miss. They think that the market is trending because gold has had a big move up, that it’s still trending. Well, it could be argued that, yes, it is. But it’s struggling up here.
So, Longs are still very viable, but we should be taking profit in our trades. We don’t want to get caught up here at these levels, but we also don’t want to be aggressive sellers when we look at the, basically, what’s going on again with the U.S. election. We’ve got COVID. All of this should keep gold relatively firm. But we would like to see it get back up above 1910, and stay above this level.
S&P 500 Index
Now, we’ve had another push lower on the S&P 500 moving lower, I discussed in last week’s, and in VantagePoint’s live training room actually, that if we’re going to fail, it’s going to be just below this all-time high around 3575. My concern here is that we continue to hold above the VantagePoint TCross Long, and in my respectful opinion, at the current time, this is simply a retracement lower. This is not a new trend down. We can see that we’ve had a full retracement back to a very clear identified, verified support low at 3194, only to rally all the way back up to 3533.
Now, yes, we did not make a new high, one could argue. We’ve made a lower high, and it’s getting ready to move lower. But again, we must break down below this TCross Long to signal a complete trend shift. If we click on our F8 right now, using the Predicted Moving Average by itself, you can see that we’re struggling to close below this blue now. Now, we’ve closed slightly below the VantagePoint Predicted Moving Average, the long-predicted at 3472. But we must stay below this level. And again, also break down below that TCross Long before we see a complete shift. And we all know how it simply has not worked out. Shorts have been very very difficult. So, again, if we see the volatility leading up to the U.S. election, and if the COVID cases continue to increase globally, that would move us to a risk-off scenario, and that would likely be the trigger that sends the S&P lower.
Now, Light Sweet Crude Oil, obviously a leading indicator also for the S&P 500. We can see we’re really moving sideways in this chop. The next move, the next bigger move in oil here, guys, is going to come from the S&P 500. If the S&P recovers, oil will likely recover. But if it doesn’t, then you’re going to see oil and the S&P go lower as the dollar rises. Now, gold would likely rise, potentially rise, with the dollar. Again, there is a scenario there, over the years, where dollar and gold have been weak and strong together. So, don’t rule that out. But right now, our medium-term crossing our long-term predicted difference with the neural index, this signal is very seldomly wrong. So, we would take that signal under advisement for our stock trading for next week.
Now, we also want to make sure that we’re not ignoring Bitcoin here, guys. Bitcoin, making it a staple as part of the AI Weekly Outlook makes sense here, guys. We don’t want to be listening to the Warren Buffetts saying that Bitcoin is a scam, and this … There’s no scam here, guys. The world could be moving towards digital currencies. And Bitcoin is absolutely leading the charge. There’s a number of analysts out there that have Bitcoin 28,000. I’m not going to disagree with that. From what I’ve seen with this heavy buying on Bitcoin over the last … When we look at Bitcoin over the last two years, I fail to see why Warren Buffett has such an issue with Bitcoin. Because again, clearly, this is a very very strong buy on dips here.
So, at the current time, going into next week, when we look at Bitcoin a little closer, we are struggling up here, absolutely. This will be dependent on U.S. dollar weakness and strength. So for now, Bitcoin is holding above the 11,041 mark, still a buy [inaudible 00:06:17] there. I will concede, I would not ignore this signal. The medium-term crossing the long-term predicted difference is telling us we are going to correct lower, and we should except some U.S. dollar strength next week.
Now again, I think that that’s a very good buying opportunity if we can get a move lower. The first level we would look at would be that 11,041 mark. But this verified support low, down around 10,533 is definitely the area that has my current attention. Now, when we go into some of our 4X pairs here, guys, again, the 4X market is highly correlated to the Dollar Index, to the S&P 500, to gold, to Bitcoin. The global correlations here have never been stronger.
Euro versus U.S. Dollar
So, when we look at the euro, the euro is going to look for gold to recover and move higher. If gold can move higher, then the euro is going to follow that. Also, the S&P 500. The correlation between the S&P 500 and gold is very very high right now. So, if they both recover, that will benefit the euro. Right now, we have slipped below this. To start the week, 1.1751. If you’re selling this, then you would want to sell as close to this particular level as you could. If we can get above 1.1751 and stay above this area, then we’re going to move back towards the 1.1831. That would be the likely scenario after we get through a couple of days of dollar strength, where we’ll watch the medium-term crossing the long-term predicted difference to guide us, the same thing that would put us into a short trade is the same thing that would put us into a long trade. When this pink line crosses this blue line, we break above the TCross Long, that would trigger Longs on the euro.
Now, we do have the ECB this week. We’ve got a number of central banks this week, so we’re really going to see what a number of the central banks are going to do with interest rates. But I don’t expect anybody hiking any time soon. The pound dollar is going to … we’re going to see a lot of volatility here. Brexit is not going well. Old Boris Johnson told the EU to just stay at home, unless you’re coming here to negotiate.
British Pound versus U.S. Dollar
That’s not, I don’t think, going to help the British pound.
So, to start the week, we look at the swing high. We’ve got 1.3082. Shorts are favored, while we’re below 1.3082, you can see we’ve got momentum building. Using a 60/40 split with the RSI, very unconventional way to use this, and a modified predicted RSI using a nine period, will let us see moves quicker. When we’re looking for a breakout point here, most people are looking for an over-bought or over-sold signal, and this is a different way. We’re using the RSI based around momentum, not an over-bought or over-sold signal here. So, this momentum is building with the pound dollar. The software is clearly warning us that this support level here, this low, could be getting ready to be breached. Now, the only thing that could stop that, in my respectful opinion, is a severe bout of dollar weakness, and of course, positive news coming out of Brexit. These are fundamentals that we must add to our intermarket technical analysis trading. Very very important, guys.
So, when we look at this right now, we will be watching this swing low, 1.2846. And I do anticipate that level being tested very early in Monday or Tuesday trading. Now, as we come in and we look closer at the dollar yen, we have no buyers yet. We have some buyers coming in down around this verified support low in the dollar yen. But this pair is predominantly very structurally bear, it’s been bearish for a very very long time. Well, we’ve never been at 3500 on the S&P 500 until more recently.
U.S. Dollar versus Japanese Yen
And the best the dollar yen could do here, guys, is about the 106, 107, 108 area. I’m used to trading the dollar yen in the 130 range. So, that tells you how much the yen has actually gained against the dollar. So, for now, when we look at our TCross Long, we would anticipate some dollar strength next week, but gold will dictate also, on this pair.
If gold breaks higher, then expect the dollar yen to break lower. But if gold fails up here, then the dollar could make some gains against the Japanese yen. We’ll continue to monitor the predicted RSI, the predicted differences in the neural index, for a signal that we could have a long trade. But for now, I would say that shorts are the better play while we’re holding below the … Basically, this verified resistance low. We’ve got the TCross Long around the 105.50 area, and then the swing high at 106.11. Unless we can get above 106.11, then [inaudible 00:11:03] remains clearly, it’s skewed to the down-side.
U.S. Dollar versus Canadian Dollar
Now, with our three main equity-based currencies, I know that some of the analysts still call these commodity-based currencies, and I’ll concede that the Canada does have a high correlation to oil. But the correlation is much higher between the CAD, the Aussie, and the New Zealand to the risk-on-or-off environment, or the S&P 500. So, when we look at this right now, the US/CAD has come up, banged into this TCross Long two days in a row, and it has failed both times. So, again, when we look at the medium-term crossing the long-term predicted difference, this warned us days ago that this pair was getting ready to reverse higher. But it’s understanding when something is moving higher on a new trend, or it’s simply corrective in nature. This is clearly corrective in nature for now. What we would need in order to continue to buy the U.S. Canadian pair, is we must break through 1.3222.
Now, if we click on our F8 in our software, we can see the blue line, Predicted Moving Average, by itself, and how the market, like a moth to a flame, excuse me, continually moves back to it. The further it moves away from it, the more likely it’s coming back to it. So, right now, 1.3239 is the actual, but the Predicted Moving Average is 1.3189. If we’re going to continue to buy this, we need to hold above this level, guys. And we need to break 1.3220 immediately. By Tuesday at the latest.
So, right now, our neural index is looking pretty good, but once again, that infamous reverse-check-mark as we come up and we approach, we break above 50, and then we try and break above 60 on the predicted RSI, only for it to kiss it and reject it, and bounce away from it. We need the RSI above 60 if we’re going to buy this, and we need to clear this blue line at 1.3189. And again, stay above it.
Australian Dollar versus U.S. Dollar
Very similar set-ups here, guys, in Aussie, U.S., and New Zealand, when we’re looking at the 4X market. We’ve got the Aussie is under pressure, partly because of the RBA, the bank in Australia. But it’s just struggling here. So, there’s a number of warning signs that the S&P could be in trouble here. And the dollar could be
getting ready for a reversal. So, when we look at this, once again, our TCross Long at 7155, but this blue line, the Predicted Moving Average, by itself, is 7128. We need to overtake that, and in order for that to happen, the S&P must move higher. The same applies to New Zealand. The exact same here, guys.
New Zealand Dollar versus U.S. Dollar
When we look at this right now, the New Zealand under trouble, but when we look again, you see this reverse-check-mark here, where basically we’ve had a hard move down, but then we’ve stopped, and we’re trying to retake back above that 40 level. So, keep an eye on your predicated RSI. Keep an eye on the key levels. With the New Zealand, when we look at this closer, we can see that we’ve … after breaking down below this on Thursday, on Friday, we’ve come right back up to this blue line, kissed that number at 6622, the actual number, and then we have failed and broken down.
This is how easy some of these trades can be, and you can allow the market to come to you. Where most people, they’re chasing prices, they’re chasing trades. We don’t do that. We can sit back and say, “Okay, if we’re going to sell this, then the market must come as close to 6620 as possible.” This is how one of the best ways of doing it because you’re not chasing something. You’re letting your prey come directly to you, you’re waiting for it to come to that level. And this can be done with buy and sell limit orders. There’s a number of different ways it can be done. But the key part is always know your levels.
So, with that said, this is the VantagePoint AI Market Outlook for the week of October the 19th, 2-