VantagePoint AI Market Outlook for the Week of October 28, 2019
The VantagePoint AI Market Outlook is designed to help traders. It’s important to remain aware of correlations in the global markets. Traders can become more profitable if they know how to get ahead of the trends. Utilizing the predictive indicators in VantagePoint Software can help traders find the right trades and the right times. Above all, traders know when to enter and exit those trades for maximum profit. Let’s look at the charts for Equities, Commodities, Bitcoin, and Forex Pairs.
Hello, everyone. Welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of October the 28th, 2019. Now, to get started this week, we’re going to begin where we always do with that very important US dollar index. Now, we will also be looking at equities, commodities, and even Bitcoin along with some of our main Forex Pairs.
U.S Dollar Index
Now, when we look at the US dollar index, a little bit of a different pattern here. As we talked about in last week’s forex weekly outlook, we anticipated this US dollar strength towards the middle of the week. That has come to fruition. However, we still have a very large hurdle to overtake, which is 97.75, and even if we do overtake this key VantagePoint level, we still have to deal with significant resistance up in this 98.00 level.
Now, the difference between this monthly seasonality that I’m seeing and the previous monthly seasonalities, as we can see, right around this same time when we can identify this bout of US dollar strength, September the 20th, we can see the same thing back here on August the 20th, a very similar monthly pattern in the dollar. Now, the difference in this particular situation is that in each one of those previous times, the triple EMA cross not completed to the downside. In this particular case, the dollar looks considerably weaker even though we’re getting this short period of strength.
Now, in most cases, this dollar strength does last until after the nonfarm payroll and slightly into the next trading week, so this coming trading week, guys, we have some major event risk. We have the US GDP on Wednesday, the FOMC on Wednesday and the nonfarm payroll number on Friday. So we’ve got a lot going on here that could really cause some volatility around the mid-week. But for now, we would anticipate this dollar strength to continue until slightly after the nonfarm payroll release, at which time the dollar is likely to sell-off.
Now, one of the confirming indicators that we have here, of course, is gold. Now, gold is again showing a very strong recovery, again off the levels identified last week, down around this 1478.00 area, but we’re now up against very formidable resistance in this level between 1522.00 and this additional level that’s up here up around 1543.00 is very, very strong resistance, but we can see that the indicators from VantagePoint are continuing to show that this is likely going to advance.
Now, when we cross-reference that to the dollar, that would tell me that the dollar strength is likely going to be very limited, when we look at additional VantagePoint indicators also, you can see that the predicted MACD difference, the trigger also, much like the predicted difference, gave us a very strong warning sign that the dollar was likely going to go higher. And again, these types of predicted indicators are what we need to get out in front of these particular moves in all of the financial markets.
Now, with the equity markets next week, we can see that gold is still very firm, which is not overly supportive of the S&P 500. Now, we’ve been at this level with the S&P 500 multiple times over the last three months and we have failed every single time. Now, when I cross-reference the S&P 500 to some of our other Intermarket correlations, for example like gold, gold moving higher, that is not overly supportive of the equity markets. Aussie US and New Zealand US, I’ll talk about that more in a minute, they’ve already started to move lower. That is usually an early warning sign that the S&P 500 and the global equity markets are likely to start moving lower.
Light Sweet Crude Oil
Oil prices. Again, as we go into next week, oil is showing some strength here with some of the geopolitical issues. Again, that seasonality is just about coming to an end, so we could see a little bit more strength in light sweet crude oil, but I suspect the second the equity markets turn lower, that oil will follow lower, too. Now again, the Intermarket correlations are very, very powerful and we want to make sure we’re watching them very closely.
Now, even with the US dollar and in the forex market in the equities, Bitcoin is still a major factor, as I’ve talked over the last few weeks, that I do support longs on Bitcoin. Now, Bitcoin tried to take out this major support level that we’ve been watching down around this 7700.00 level. Now, what I’ve always stated is that you have to be very cautious of bear traps around this type of area. We can see that Bitcoin stalled and in my respectful opinion, the only reason Bitcoin went lower was because of the Facebook Zuckerberg testimony this week. That caused a lot of volatility on Wednesday and Thursday, and then Friday, Bitcoin had fully recovered these minor losses.
Now, we still have some pretty big resistance up here on Bitcoin up around this 8,802, but an indisputable power move up here. The predicted difference warned us of that, the predicted RSI, and again, when we’re looking at this right now, we really do need to take out this 8,802 high and that should open the door back up towards this 10,000 mark. That’s what we’re going to be watching as we move into the coming week. Now, I don’t anticipate that move is just going to jump out at the beginning of the week, not with all of the US data, the FOMC, the nonfarm payroll number. There’s a lot going on there, guys.
Euro/U.S. Dollar (EUR/USD)
As we come into our main forex pairs, once again, you can see the Euro. We worked on this one in the VantagePoint live training room also as the resistance started or as the support started to form on the US dollar index, which directly pointed us to shorts on euro US. The dollar index in the euro US, 100% inverse correlation, meaning one goes up, the other goes down.
Now, when I look at this, and as I had stated with the dollar index, I’m seeing a little bit of a different pattern here. If we get a very dovish FOMC, that could actually boost the euro towards the latter part of this week. Right now the main support level, 1.1068, this is the big level that we would have to take out if we have any chance whatsoever of hitting the 1.0991 low. My optimism on this right now remains guarded, but we do have a nice signal. You can see the MACD predicted difference cross here crossing over that trigger, giving us a very early warning sign that the Euro US pair was getting ready to move lower.
Now again, when you connect the dots here and you look at the resistance up here and then combine it to the MACD predicted difference crossing over the trigger, that was a leading, not lagging, but a leading indicator to tell us that the euro was going to move lower. Now, it doesn’t mean that the euro is going to completely reverse and move down back into the 0.108 area, but it is possible. We watch our support levels down below. The first one, again, the 1.1068, then we watch the 1.0990 area and see if we can break down below that. Right now, at least for the near-term, the euro remains somewhat of a bearish tone to it, but we must break through 1.1068 and stable that if the euro is to move lower.
U.S. Dollar/Swiss Franc (USD/CHF)
Now, with the euro moving lower, we can see that US Swiss franc has immediately benefited from that as it starts to push higher. But here’s the thing, guys. When we look at this, after all of this time with the equity markets rallying up over the 3000 mark, the US Swiss franc pair has been unable to hold above parity. This is showing the longer-term depreciation of the US dollar and the appreciation of gold. So when I’m looking at this, I’m saying, okay, I would anticipate the US Swiss franc would continue to move higher for at least another three or four days, but we would be happy sellers up here at this 1.0027 mark. But first, we have to break back above parity and stay back above parity. In my respectful opinion at this particular time, we’ll continue to play the long side for maybe another four or five days, but then we’ll be looking for shorts as soon as we move back towards that parity level.
British Pound/U.S. Dollar (GBP/USD)
Now, as we look at the British pound US dollar, again, when we look at the indicators in here from VantagePoint warning us, the medium-term crossing, the longterm predicted difference, the British pound started to pause up around this level that I talked about last week. I had stated that I’m not overly confident that the British pound US dollar can move much higher from the 130 level. So we’ve come up to this area, we’re failing and down we go.
But to be clear, we have some very powerful support down here between 1.2851 going all the way down to 1.2693. I would anticipate a retest of 1.2693 by midweek, but at that time, we have to reassess if we want to actually buy this or not. If the Brexit is resolved, we know that the fed is going to cut rates. We know the fed is going to be dovish. There are far more reasons to sell US dollars against the British pound to buy them, but the problem is Brexit. Once Brexit is resolved, one way or the other, the British pounds should start moving higher.
U.S. Dollar/Japanese Yen (USD/JPY)
Now, as we move into the dollar-yen for next week, the dollar-yen again has completely stalled the entire week in this 108.75 area. We have very strong resistance up to 109.30. We could test that level prior to the nonfarm payroll number on Friday, but the likelihood of a sell-off between anywhere below 109.50 remains very, very strong here, guys. So we want to use any move up for a potential short.
The VantagePoint indicators, you can see, are warning us that there’s a very limited upside, but again, a lot of event risk next week that we have to be cautious of. But for now, we want to watch the most recent high, and just to be clear, a lot of times what the dollar-yen has been doing is putting in a low or putting in a high on Monday or early Tuesday and then completely reversing that move. So in this case, we would look for dollar-yen to keep moving up in anticipation that it’s going to move lower. That is the key here, guys. We don’t want to focus on what’s currently happening. We want to forecast what’s going to happen. That is a critical part of any type of trading.
U.S. Dollar/ Canadian Dollar
Now, as we move into our main three commodity currencies, in my respectful opinion, the US CAD is very close to a turning point. Whenever we breakthrough major support like we did here at 1.3105 and then the market starts to get all bunched up here and we’re not getting a lot of follow-through, we’re getting almost nothing actually for follow-through, then we look for additional support levels. We see this down about the 1.3017 area. This is the area that I would look for the US Canadian pair to completely reverse back up.
We can see that our MACD predicted difference trigger is crossing over the MACD trigger. We can see that we’ve got a medium-term crossing our longterm predicted difference. They’re all warning us that this is going to turn around off of this major support level. This is the way we look at this. We combine the verified support with the predictive reversal indicators in VantagePoint and that warns us that, look, this is probably not a great idea to short down here, probably not a good idea.
Now, they could challenge this area down around 1.3017, but I believe that area or within 30 to 40 pips below that area will hold and that’s where we will see this violent reversal. The second the equity markets turn lower, guys, US Canada’s going to go higher because when the equity markets turn lower, they’re likely to pull light sweet crude oil down with it, both of which will hurt the Canadian dollar, and again, after the election in Canada, which a lot of people have been talking about, is not a positive for the Canadian dollar. The liberal government has got a minority government. They lost a very large number of seats in the election.
So again, minority government, probably not going to get a lot done, so I’m sure that the Bank of Canada, which is going to have their rate announcement on Wednesday, is going to discuss this and talk about that. Also, they’ll say they still have concerns over the US China trade deal, so there’s still more negatives than positive on the Canadian dollars. So when we combine all of that together, that would have us looking at longs down towards this 1.3020 area.
Australian Dollar/U.S. Dollar (AUD/USD)
Now, Aussie uS and New Zealand US will follow the Canadian dollar. The Canadian dollar weakens with equities and oil. The Aussie and the New Zealand dollar will also. I talked about this in last week’s forex weekly outlook, pointing you guys to a potential short up here in this 0.6894 area. Now, we’ve come up just below that area to 0.6883, and then we’ve dropped down pretty hard all the way down to 0.6809. Now, that’s a fairly big move for the Aussie currency. We’ve stalled at 0.6806. What we’re watching this week here, guys is can we break through 0.6806 and stable all that. If we can’t, then we’ve got a pretty decent long trade here.
New Zealand Dollar/U.S. Dollar (NZD/USD)
But again, the key things that I always say, know your levels. That’s a big level at 0.6806, and when we look at the New Zealand currency, the New Zealand against the US dollar, we see the exact same thing here, guys. Major support, 0.6341, the level I talked about last week. The upside, I always try to give everybody a plan A and a Plan B. The plan A here was to basically short this thing up at this major resistance level. If it breaks through, then we can happily go long, but that didn’t happen. We failed at that level. Guys, that’s like shooting fish in a barrel here. If we know what we’re looking for, we then combine these powerful predictive indicators from VantagePoint, the medium-term crossing the longterm predicted difference. All of them were pointing down and sure enough, we go lower.
But again, the main level here at 0.6341, we’re closing the week out here at 0.6347 right on this level, so be cautious around here. If we do get a breakout on the S&P 500 and it starts moving towards 30, 50, that will actually support longs on Aussie US and New Zealand US, but it will indirectly put downward pressure on US CAD, so it’s all about understanding Intermarket correlations and then combining them with these major levels.
So with that said, this is the VantagePoint AI Market Outlook for the week of October the 28th, 2019.