VantagePoint AI Market Outlook for the Week of October 26, 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 October the 26th, 2020.
Now to get started this week, we’re going to begin where we always do, with that very important U.S. Dollar Index. Now, the dollar, under a considerable amount of selling pressure as suggested in last week’s weekly outlook, this week coming up though, we’re going to see a little bit more volatility as we get closer to the U.S. election. The dollar for now looking at our verified support low, we’ve got some support forming for the dollar here at the 92.46 level. However, when we look at our neural index or medium term crossing or longterm predicted difference and the inability for the predicted RSI to get back up within the 60-40 split area, suggest we still have a little bit more downside momentum on the dollar before the likely turnaround in the first week of the new month.
Now again, when we look at the dollar here using that key pivot area, we’re using the VantagePoint T cross long 93.31. This particular level, the primary directional bias of the dollar is down while the market is below this level. When we look at our secondary level, the predicted moving average is a critical pivot level. We can see when this started to turn around right at the beginning of last week, we closed below that predicted moving average. We came back up and tested it multiple times, I would argue almost daily failing at that predicted moving average. We look for this again to continue for at least a few more days, but as we start to get towards the end of the month and the first week of the new month, that a dollar often turns around and does see some demand.
S&P 500 Index
Now with this dollar weakness, that of course has kept the S&P 500 very strong. Now the key point that we want to make here is if the market stops at a certain level once or even twice, we could call that a coincidence. If the market hit the key VantagePoint T cross long in this 34.26 level every single day last week, this is not a coincidence. It’s represented good buying off of this particular level, 34.26. We can see that the R, predicted RSI failed to break down below the 40 level to show momentum on the downside. It subsequently corrected itself. But once again, we want to see the predicted RSI, not only about 50, but if we’re going to get any kind of real momentum on the S&P, we would like to see the RSI breaking above the 60 level.
Now our medium term predicted difference is starting to turn back up with the neural index. If we can get this pink line, which is the predicted difference, crossing the longterm predicted difference, that will trigger a bigger rally here. Now, my only concern with this is we have our all time high here at 35.75. We then have a lower high at the 35.33 mark, and then another lower high, again this time coming in at 34.95. So the immediate area that we would have to target to break would be 34.95. Now, as we look at gold, gold continues to wait for the dollar to show its hand here. When the dollar breaks higher or lower, we will see the inverse move on gold. So if dollar breaks out, the dollar breaks out to the upside, gold is going to sell off, but if the dollar sells off, we will see gold turn around and extend its gains.
Right now, we are dead flat, but to be clear, we are in a channel here. The predicted RSI is sitting at 49.6, very slightly bearish. But again, there is no downward momentum, but there’s very little upward momentum on gold right now either. So for now, buying the bottom, staying with the primary trend is more reasonable. Now, when we look at oil going into next week, demand for oil is likely going to dry up. We’re once again moving sideways here with a clear downward bias. When we look at the break of the 40 level on the predicted RSI, this suggests that downside momentum could be building on oil, but again, oil is still going to take a lot of its cue from the S&P 500, but this correlation is likely to break down once we get into November and hurricane season is officially over. Once hurricane season is done, then it’s going to go back to regular supply and demand issues with oil.
Remember that guys, and there is no summer driving season. That’s in the rear view mirror to say the least, never really was much of one in this year with the COVID. But again, oil inventories are still very, very high, so I can see more pressure to the downside than the upside when it comes to oil.
Now, when we look at the other additional currencies before we start our Forex market, once again, I have been a very, very strong advocate for buying Bitcoin, despite the Warren Buffets of the world and people saying Bitcoin’s a scam, yada, yada, yada. Well guys, it’s not a scam. This is a real investment here. And once again, remember where we’ve been this year with Bitcoin yet again. Even with all the COVID stuff, we had a push down into the 3,500 mark. Bitcoin is now at 13,000, approaching the 13,000, over the 13,000 mark.
So again, don’t let somebody persuade you look at the charts. When we look at the charts, this was an incredibly bullish move. And again, we’ve been channeling sideways, and then we had a nice snap higher, but again, this is something we’ve looked at extensively in the VantagePoint live training room. Now what I will say with Bitcoin going into next week, we could see it towards the end of next week selling off a little bit as that as we’re expecting some dollar strength going into the first week of November. So again, Bitcoin is probably going to back off a little bit. We are getting a little bit overextended, but that doesn’t mean it can’t go higher here, guys. We can see a little bit of profit taking on Friday. Right now, this is a strong buy whilst holding above the VantagePoint T cross long at 11,730.
But if we click on the F8 in our software, we get a very nice intraday pivot level, 11,000, or excuse me, 12,523.80. That’s the area, the first level we would consider for longs to start the week.
Euro versus U.S. Dollar
Now, as we come into our main Forex payers, looking at the euro domain, all eyes are on the euro, the pound and the yen. Once again, the euro continues to move within the overall channel. In my respectful opinion, only we must get above 1.19 very, very soon. And I mean, within the next two to three weeks, I would like to see it next week. I think we have a shot of that. We can see that our medium term crossing our longterm predicted difference, the reverse check mark this time off of the 60 level saying we still have upward momentum. So again, when we look at our key VantagePoint level, understanding how to use those levels, 1.1782, the T cross long, the primary trend is still up while we’re above this level.
The euro is firmly above its yearly opening price, further supporting those longs. But again, it must get moving. When we look at our F8 to start the week, we look at our predicted moving average, the blue line by itself, using it as a very powerful pivot. That level is coming in at 1.1813. So if longs to start the week are between 1.1780 and 1.1811, but again, my concern is we have some very stiff verified resistance in the area between 1.19 and 1.20. If the euro can get above 1.20, then the sky’s the limit here, guys. It could move considerably higher.
British Pound versus U.S. Dollar
Now, when we look at the British pound, U.S. dollar going into next week, basically this a very similar situation here. The Brexit is pushing the pound back and forth, but overall, the pound is reacting to the U.S. dollar weakness.
That’s what’s going on here. So we’re still pushing a little bit higher. Now, the key VP levels going into next week, we’re looking at 1.2971 to hold above that particular level to remain long. Now, we are still below the yearly opening price on this pair, but again, I think with further dollar weakness, the pound could extend, but the first level here, again, we need to hold above 1.2971. When we click on our F8 in our software, we can see that using that predicted moving average is a critical pivot area, 1.3018. So basically the longs are between the 1.2970 and 1.3018 to begin the week. We’re looking for the market to hold above these particular levels. Our indicators right now, our RSI is losing momentum, but we’re still firmly above the zero line. The neural index is warning us that we’ve got a little bit of downside coming on Monday, but on Tuesday, we want to think about looking at longs yet again.
U.S. Dollar versus Japanese Yen
Now, as we look at the dollar yen for next week, once again, very few buyers for this particular pair. It’s really taking a beating last week. But again, this signal, when we look at this signal more clearly, we have not been able to clear the VantagePoint T cross long at 105.59 for the last several weeks. So again, right now that current level is coming in at or about the 105.30, but this is the level you want to watch here, guys, this blue line, this predicted moving average, 105.04. If we can hold below this, then the dollar yen is likely going to take another run below 104. But if we start getting above this, and one of my favorite strategies is just using buy limit orders just above the VantagePoint predicted moving average.
So if the pressure comes off the downside, I have a limit order sitting there waiting to be activated on any type of bullish move here on dollar strength. Now against the yen, it appears very likely at the current time, but we do have the medium term crossing the longterm predicted difference. The neural index is not an agreement, but if that neural index turns green, then we have a real shot of breaking above that particular predicted moving average at the 105 or 104 level.
U.S Dollar versus Canadian Dollar
Now, when we look at our three equity-based currencies, I used to call them commodity currencies guys and I just don’t do it anymore because these currencies, the Aussie, the New Zealand and the CAD, they are absolutely responding to anything that goes on with the S&P 500 or the global stock markets, but more specifically the S&P 500 is how I’ll measure that.
So the T cross long to begin the week, 1.3191. If the S&P 500 builds off that strength of that level of 34.26, where we’ve seen it bounce off of five days in a row, if it accelerates to the upside, U.S. Canada will aggressively move lower or vice versa if the S&P 500 sells off. So remember this, the indicators right now are very mixed. We still have a bear signal on this pair, but when we click on our F8, this is again the level you want to watch, the 1.3153 area. We want to make sure we’re staying below that and below the 1.32 level, before we start adding shorts, because we do have some very, very strong, verified support down here that goes down to the low of the 1.30 level where this is where I believe we will see buyers coming back in as oil sells off.
Australian Dollar versus U.S. Dollar
Now with the Aussie and the New Zealand, very similar trade. The Aussie is really making an attempt to break the T cross long at 71.31. In my respectful opinion, the trigger for this will be the S&P 500. If it accelerates higher, the Aussie and the New Zealand are going to follow. We’ve got our medium term crossing our longterm predicted difference with the neural index, a fantastic countertrend signal here, or again, a contrarian signal because we’re below the T cross long, but that medium term tells me that the medium term trend is weakening against this longer-term trend, which has been down. So we’re looking to build and get above this. Now, 71.31 is the key level. If we click on our F8, you can see we’ve overtaken the long predicted 71.12, that very powerful predicted moving average with the correlation of 31 other markets that are tagged to that.
New Zealand Dollar versus U.S. Dollar
So we’re going to keep a very close eye to start the week on the 71.11. Can we hold above that? That should see us accelerate, but we need the backup support of that S&P 500. The same thing will apply to New Zealand, but New Zealand is already taking advantage of this. Now it’s already pushing higher. The Aussie U.S. is above its yearly opening price, but the New Zealand U.S. dollar is not. So again, we could have a little bit more opportunity on the New Zealand, but again, we need the support of the S&P 500, of gold, and we need the dollar index continuing to move lower to assist these two trades. So with that said, this is the VantagePoint AI market outlook for the week of October 26, 2020.