VantagePoint AI Market Outlook for the Week of October 5, 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 5th, 2020.
Now, to get started this week, we’re going to begin where we always do, with that very important US Dollar Index, which affects our commodity trading, our equity trading, and of course our currency trading in the forex market. Now, with the Dollar Index, we’ve made another new high here breaking through this partial channel here, but again, the dollar unable to hold gains. Now, a lot of things going on in the US right now, with the election, the US President getting the COVID, so risk-on and risk-off flows are slightly skewed to the risk-off scenario. That may favor the dollar here. Now, as the market, as the Dollar Indexes come lower, it’s hit the VantagePoint T cross long to the number 93.73 multiple days, three days in a row.
Now we’re coming off the non-farm payroll number. In my respectful opinion, only here, guys, try and ignore the headlines on that payroll number. It was actually a pretty solid number. The U6 number was a good number. The household number, obviously not great. It was below consensus. But again, the U6 number is moving lower. It’s moving in the right direction, so it’s not a great number, but it’s certainly not horrible. And again, ever since the COVID stuff has started, the U6 has been progressively moving lower.
Now, when we look at this failure point, we see the medium-term crossing the long-term predicted difference, sending the dollar lower in a corrective fashion. For now, while we’re above 93.73, this is simply a corrective move lower. But again, if we break through the 93.73 level, that would set off a further trend back to the downside on the dollar.
Another way of looking at this is we take the blue line and the black line, we remove it and use just the blue line. We can see exactly when this trend started here, or this shift, this corrective move lower, as we break down below this predicted moving average. We then come up and test it multiple times only to fail. That level is at 93.95, so with our close, we’re looking for the market to hold below basically the 94 level. The indicators here, my only concern with further dollar weakness is the fact that if we look at the 60/40 split on the RSI, we don’t want to be using the RSI or any of these indicators for an overbought or oversold type of condition. We’re looking for momentum in the market. This is the type of market we’re dealing with. If we can break down below the 40 level on the RSI, then momentum would be building to the downside. But if we can’t get below the 40 level, then the dollar could actually recover. Right now, the RSI, predicted RSI, 48.9, clearly a bearish tone.
Now, when we look at some of the counterparts to that, we look at gold. Gold has had a minor recovery, but as the Dollar Index stalls at that 93.73 level, we can see the inner market correlation here that gold also stalls trying to get back up above the T cross long at 1916.54. So again, we need to push above here. We’ve had a very strong corrective move back up in gold. We can see our medium-term crossing our long-term predicted difference with the Neural Index. We get a rising RSI that breaks above the 50, comes back, checks the 40 level, and then goes back up to the 60. However, like the Dollar Index, failing at 40, we’ve got the gold failing at the 60 level. We need momentum here, guys.
If the RSI is used properly, in my respectful opinion, not as an overbought or oversold, but actually as a momentum gauge, then a break above 60 would see gold going higher. But again, we must break through this key VantagePoint level. Now, again, if we come back and we use our blue line by itself, we can see when this trend was confirmed. We’ve got our medium-term crossing our long-term predicted difference, which was well ahead of the market on the upside, as we have support building of this verified support level, we then see the market break above the VantagePoint predicted moving average that has the correlation to 31 other markets. It holds above this blue line and gold recovers. But again, we must break through that 19.17 level to confirm any further longs.
S&P 500 Index
Now, when we look at the S&P 500, obviously on that dollar weakness, the S&P 500 is extended higher on the exact same signal, looking at the medium-term, crossing the long-term predicted difference with the Neural Index turning green. But again, we’re struggling around this critical level, this T cross long, which is 33.39. Once again, if we click on our F8 in the software, we get this pivot level here, this blue line. We’re looking for the market to hold above that. That particular level is coming in at 33.37. So we have a lot of resistance around this 33. I’m just going to call it as the 33.40 area. We get above 33.40, we could see equities, the S&P 500 and some of the other US indexes move higher.
Now, as we look at Bitcoin, which I certainly do apologize, I forgot to mention Bitcoin, my little friend Bitcoin here last week. But Bitcoin, again, is just moving sideways in a channel here. The low end of that side is 98.58. The current upside of this particular, the immediate channel, is around 10,948. On any sign of US dollar weakness, Bitcoin will rally back up. The concern here is that we could have risk-off flows now with all of this additional risk coming into the market with Trump getting COVID, the election, a lot of things going on, but ultimately, Bitcoin, if the dollar tanks below 93.75, Bitcoin will be a strong buy here.
Now, Bitcoin has made some very, very solid returns over the last two years despite some of the market pundits not promoting buying Bitcoin. I have not been in that camp. I was for about six months, and then I realized I missed a very strong investment here on some of these calls. Case in point, when VantagePoint had called Bitcoin moving higher from this 9000 mark, I didn’t even blink at that particular time because I’ve seen this rally before. Right now, guys, keep an eye on this immediate channel for at least in Monday’s trade. We’re likely to see Bitcoin move lower, but watch this current support level at this verified low coming in at 10,146, because I think we will have a good buying opportunity by midweek.
Euro versus U.S. Dollar
Now, when we look at some of our main forex pairs here, again, when we look at the euro/US pair, very, very similar almost identical to the Dollar Index, except inverse. The dollar can’t break lower, but the euro also can’t break higher. It’s getting all tangled up in this T cross long using the power, powered by AI, to identify these critical levels. Now, again, when we look at this, we can see our medium-term crossing our long-term predicted difference with the Neural Index of fantastic corrective buy signal here that we were actually doing in the VantagePoint live training room. But again, we’re stalling out at this 117.49. A break of 117.49 should set off an additional wave of buying on the euro. Now, my concern here is the 116.13, we’re well within the range here, but we need to hold above this particular level. You want to look to gold contracts if you’re trading the euro/US. Gold up, euro up. That’s the way this play works. So again, we’ve had a corrective move using the medium-term crossing the long-term predicted difference, which is virtually zero lag, the RSI rising. But again, we must break through 117.49.
If we click on our F8 here, we can see again when this move actually started. We had support building at the 116 level, then the market crossed over. The VantagePoint predicted moving average and it has managed to stay above that level for four days in a row. There’s enough meat on the bone for both bulls and bears on this particular pair.
British Pound versus U.S. Dollar
The pound dollar, very, very similar here, guys. When we look at the pound dollar, we’ve had support building here three days in a row, medium-term crossing our long-term predicted difference. The Neural Index, I will point out, within one day of putting in a bottom, the Neural Index went from red to green and we’ve got a rising RSI. Now, did it move higher because it was oversold? Of course not, guys. It moved because we had momentum building back to the upside and the dollar flows were weakening.
Right now, for this week, we’ve got our T cross long at 128.93, but in my respectful opinion, only this key blue line, using the predicted moving average by itself, this pivot area of 128.63, that is where you’re going to see your activities. Either the buyers are going to step in at this level or the bulls are going to throw in the towel and we’re going to break down. But right now, the pound dollar trading in a very tight range here with our low area of 126.75, and the upper part of that range coming in at 13006. Again, we buy the bottom and we sell the top until such time we get a solid break, but the indicators from VantagePoint are pointing towards further dollar weakness against the British pound.
U.S. Dollar versus Japanese Yen
Now, when we look at the dollar yen going into next week, the dollar yen clearly struggling to get above this newly formed verified resistance zone at 105.80, if we can push above that, we could see it extend higher, but a very ominous signal. The medium-term crossing over the long-term predicted difference with the Neural Index. This pink line measures the VantagePoint medium-term crossover against the VantagePoint long-term crossover. Again, a very fast, no lag way of getting into the market very, very early.
Now, the only downside with a signal like this is it’s early and there could be a bit of volatility, but as long as you know your levels here you should be fine. But to start the week, it appears, again, risk-off flows favor the yen. They do to some degree favor the dollar against certain currencies, but not against the yen. We’re going to monitor this right now, but right now, as we look at this 105.80 area, clearly shorts are favored.
U.S. Dollar versus Canadian Dollar
Now, with the US/Canada going into next week, the US/Canada also a fantastic corrective move lower. But as you can see, the predicted RSI has that very ominous reverse check-mark here where it’s kissing the 40 level. We’re lacking downside momentum. The question here is what do we need to push it through the VantagePoint support levels, which are currently at 132.88, and we have failed there two days in a row. What we need for that to happen is oil prices to rise and the S&P 500, and more or less the global equities, but mainly the S&P has to continue to advance. If it advances, US/Canada will move lower here, guys. If it doesn’t advance, then US/Canada will hold the 132.88 area and continue to move higher, probably back up into this verified resistance high at or about the 134.20, which I’m sure we’re going to see sellers trying to come back out.
Australian Dollar versus U.S. Dollar
Now, the same would apply to the Aussie/US and the New Zealand/US. Most traders are caught up with different indicators, Fibonacci, waves, all these different wild and wacky indicators from the 16th century through to the early 19th century. But when we’re using AI, we’re looking at this and saying the correlation to 31 other markets, the main correlation with the Aussie/US and the New Zealand/US, and even the US/CAD for that matter, they are dependent on risk flows, the equity markets going higher. More specifically, to narrow the field, just monitor the S&P 500. If it’s going higher then the Aussie/US is going higher, New Zealand/US is going higher, and US/CAD is going lower. But if the risk comes off and the equity markets crash, then this key VP level of 71.76 will hold. The exact same thing will apply to the New Zealand dollar here, guys.
New Zealand Dollar versus U.S. Dollar
Now, it’s trying again to get very bullish, but this is the signal that set this off. We have our medium-term crossing our long-term predicted difference with the Neural Index, the rising RSI. Again, if we click on our F8 in our software, we can see right here after we confirm the bottom and we clear this predicted moving average blue line, we’ve had four to five solid days of buying on this particular pair. Again, if you know your levels, trading can be far, far easier. Now, again, we are likely to see a very choppy volatile week. There’s a lot of things going on there. But again, if you know your levels and your inner market correlations, you will be able to navigate these very treacherous waters. With that said, this is the VantagePoint AI Market Outlook for the week of October 5th, 2020.