VantagePoint AI Market Outlook for the Week of September 21, 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 September the 21st, 2020. Now, to get started, we’re going to begin where we always do, with that very important U.S. dollar index. Now, once again, we find ourselves almost exactly where we were last week. The dollar is running in a very tight channel here. The larger part of that channel is coming in at approximately the 93, we’ll just call it the 94 level, and the downside, we are making new lows here. Those new lows are coming in around 91.71. The current signal here from Vantage Point, we have our MA Diff cross, which has crossed over more or less at the beginning of the week. Dollar under pressure for the better part of this particular week. However, we can see that our neural index is turning green here.
We’ve been green the last few days, and we are holding along this very strong support level, which is currently at 92.68. The dollar unable to break down below this particular level. Now, this big dark red on this cloud here sitting over the dollar index like a guillotine, and again, we look for momentum in the market. At the current time, we are lacking momentum, directional momentum. This is evident by looking at the predicted RSI. Now, this predicted RSI has been modified. It’s a shorter period, a nine period, and it uses a 60/40 split. I am not interested in trading off of overbought or oversold conditions. I’m looking for momentum in the market. So on a breakdown below 40, I’ve noticed that I do see momentum building for a bigger move. Now, most people think that you can only make money in trending markets, and that’s just not factual here, guys.
Consolidating markets like this can be very effective while we’re waiting for the dollar to either break higher or break lower. We look at the Vantage Point indicators. We sell the top, we buy the bottom. We use the predicted highs, the predicted lows, and the main indicators, but the main indicators are still warning us that the dollar potentially has further downside. Now, if that’s true and that comes to fruition, then that would make gold longs, very attractive here. But as we can assess, we’ve got the same channel in gold that we do in the dollar index. This is the basis of inner market technical analysis here, guys.
So when we look at this, gold moving sideways, waiting for some kind of catalyst here to trigger further longs or shorts. That’s what we’re waiting for. Right now we’ve got verified resistance at the 1983 mark but very strong verified support down in the low, at the 1911.
And pretty much a breaking point for gold for me would be a close below 1874. The pressure would then be off the top side. Our indicators again are basically dead flat with a slight upward bias. We’re closing about that T-cross long at 1958, but again, very, very little momentum in the market with the RSI at 52.6.
S&P 500 Index
Now, we can further assess that the equities have come under pressure this past week. And again, I don’t think that the S&P is going to break down too much lower. We’ve got a good verified support level at 3286. As identified in the Vantage Point software, our MA Diff criss crossing back to the upside. So for this coming week, we’re looking for the market to hold above 3286. Now, if we do break down below that particular level, we have additional, very, very strong support at 3194. A breakdown below 3194, only in my respectful opinion, that would, again, take the pressure off the upside and we could be looking at a shift in the trend.
Now, a lot of factors could play into that, whether the COVID virus continues to expand, whether the U.S. election, too many different things to even discuss here, the Fed. But even with the Fed, this past Wednesday, it wasn’t enough to boost the equity markets. We have a verified resistance here, 3417. We’re looking for a break on either side, a break above 3417, or a breakdown below 3286 for the next bigger move.
Now, one of the key in our markets that we will look to gauge those equity markets is, of course, light sweet crude oil or even the gasoline contracts. When we look at this, oil is a fresh new signal. We’re holding above the T-cross long at 40.25. As long as we can stay above that particular level, then that should support the equity trades also. But again, we need to hold above that.
When we look at our medium term crossing our longterm predicted difference, this is the exact signal we look for on a weekly basis. We have a verified support level on oil. That’s come in at 36.40. We have our medium term crossing our longterm predicted difference, but we wait for the neural index to turn green to pull the trigger on longs, and then we can see the outcome from this. So we will look for oil to continue to rally, but again, if oil starts selling off, that could also confirm that the S&P 500 and the global indices are getting ready to turn lower also.
Now, as we look at, again, coming into next week’s trading, we should never discount or rule out Bitcoin. Again, I’ve been a strong advocate for this, that longs have been very, very good at buying on any dip on the Bitcoin versus the U.S. contracts, whether you’re doing that via CFDs or through the futures contracts, or even through the ETFs with the GBTC, the Bitcoin trust.
It’s a good way to dip your hands in there. I don’t know about you guys, but I have no clue how to mine coins. And I don’t think that’s something I’m going to learn anytime in the future, but I do know how to trade it. And whether it’s paper or not, it’s very, very attractive. So right now, Bitcoin, very strong support down at the 9858 level. And again, the only thing we should be very cautious of, that we have an ominous signal here, the medium term crossing the longterm predicted difference suggesting that the medium term trend is weakening. However, when we modify our RSI, we can see that it’s appears to be only a retracement in nature. The RSI coming down, kissing the 60 level to the number. And we’ve got a reverse check mark here suggesting that Bitcoin actually could be getting ready to go higher. I believe that, that is exactly why the neural index refuses to turn from green to red. It’s picking up on something also.
This is the benefit, guys, of using multiple indicators and not just putting all our eggs in one basket on a single indicator or a single series of indicators. We want momentum indicators, we want predicted moving averages, and we want to measure the medium term against the longer term trend with the neural index. So right now, Bitcoin long still look quite viable while above 10007.06. But, again, that verified support down here, this is exactly the kind of signal, again, we look for. Support building here, medium term crossing our longterm predicted difference, neural index turns green, and that leads to a very substantial rally in the Bitcoin contracts, which we were actually doing in the Vantage Point Live training room.
Euro versus U.S. Dollar
Now, as we look at some of our main Forex payers in the next week, currencies, again, the Forex market currently almost $5 trillion a day, the daily turnover, a market that we all want exposure to here, guys.
So when we look at this right now, the euro is running in a channel the exact same as the dollar index. We’re waiting for a move or some catalyst to trigger this to move higher. So for now, guys, what we do is we continue to use these Vantage Point verified support zones. We buy down in to the 1691, 1753, and for your more aggressive date day traders, we sell into the 119 level. But just remember that the euro is firmly above its yearly opening price and the dollar index is firmly below its yearly opening price. So the biased will always be for the euro higher, at least for the time being. Now, the euro does require gold contracts to extend if it’s going to extend its gains. Again, we want to watch these intermarket correlations very, very closely.
British Pound versus U.S. Dollar
The British pound-U.S. dollar going into next week, you can see using the Vantage Point T-cross long, we have strong verified resistance at the 130.17 level.But again, a very nice signal off of the Vantage Point medium term crossing the longterm predicted difference with the neural index. The problem here is, when we add the RSI into the mix, we can assess here that we have very little momentum. We’re not be able to get above the 50 level on these contracts and we can’t get above the 60 level either. That is an absolute problem. So we use the T-cross long. Right now, there’s still a negative bias against the British pound. We’ve got Brexit. We’ve got COVID cases in the U.K. We’ve got no Brexit deal with the European Union. So there’s still a lot of negatives against the pound, but just remember it still comes down to either buying or selling U.S. dollars. So if the dollar index breaks down below the aforementioned levels, then the pound is likely still to move higher.
But for now, to begin the week, 130.17 is the level we want to watch. If we click on our F8 using our Vantage Point software and the blue line by itself, the picture is a little clearer here. But again, we’re closing the week below that critical 129.34 level. We want to make sure we retain it that level as soon as possible.
U.S. Dollar versus Japanese Yen
Now, with the dollar-yen going into this week, once again, we have a strong verified support level sitting at the low of 140.19, and the dollar-yen could see a short term bounce. The RSI here is at six. The average trader will look at this retail trader and say, “Well, it’s oversold. Let’s just buy it.” And I would caution against that mentality. We’re in a momentum-based market. If gold extends higher, that will hurt the dollar, but it will help the Japanese yen. The last time gold was at these kinds of things levels, above the 1900 level, the dollar-yen back in 2010, 2011, was that the 72 to 75 level. So I could argue very easily that the dollar-yen pair is grossly overvalued at one 104.
So when you think that it can’t go lower, just remember, go back in time and use your inner market correlations to determine whether this is fair value for the dollar-yen pair. If we look at the past price figures, gold prices, it’s not fair value. It’s rather high at this particular level. So right now we look at our T-cross long, 105.63 is the key level. You’re short while below this particular level. If we click on our F8 using our Vantage Point software, we will retrace back to the 105.08 level. Between 105 and 106 is a premium short in my respectful opinion, but our corrective move first can’t be ruled out. So watch the two affirmation levels here to begin the week.
U.S. Dollar versus Canadian Dollar
Now, as we look at the three main equity-based currencies, the CAD, the Aussie, the New Zealand, they run very, very similar here, guys.
So when we look at this right now, again, the U.S.-CAD pair moving towards open slightly, but the MA Diff cross has taken place right in this particular area. And that pink line over the blue line measures the medium-term trend against the longer-term trend, and this is saying that the medium-term trend to the upside is weakening. So we look at our verified resistance zones. We can see very clearly the resistance high, 132.59. If the U.S.-CAD is going to break higher, here’s what we need, guys. We need equity markets selling off. We need oil selling off. If that does not happen, the U.S.-CAD is going to reverse lower. We’re already getting a warning sign of this right now with that medium-term predicted difference. So to start the week here, guys, our resistance is 132.60 and then we have strong verified support of 131.28, but more specifically that key T-cross long 131.75.
Australian Dollar versus U.S. Dollar
If we start breaking down below 131.75, you’ll want to get shorts on the table immediately, and a close below that level will confirm. Now, with the Aussie and the New Zealand, we see a very similar picture here, except inversely. The Aussie is holding above the T-cross long 72.74. Our indicators are very mixed here between the neural index and the predicted differences in the RSI. It’s a very mixed bag, but you can see that there’s been multiple opportunities buying off this Vantage Point T-cross long on a daily basis. So as long as the equity markets are holding above, the S&P 500 more specifically, is holding above 32.98 then the Aussie-U.S. pair is likely to hold above 72.74. That’s how we want to connect the dots to this. And when we look at the New Zealand, we see the exact same trade. If we look at our New Zealand, and we’ve got some resistance on the New Zealand pair here, but the indicators from Vantage Point are telling us that we still have room to extend.
New Zealand Dollar versus U.S. Dollar
So we have two very strong support levels. Our T-cross long coming in at 66.93. We stay long while above that level. When we click on our F8, on an intraday basis, we can use the level of 67.31 for potential longs. Now, we do need to monitor the additional indicators, more specifically the neural index, the predicted differences, and we must overtake this verified resistance zone. That high, 67.89. If we can overtake this, you’re going to see this pair extend. Now, the event risk for this particular pair this week, of course, is the Bank of New Zealand, the interest rate decision. I don’t think we’re going to get anything really crazy from them. Maybe a little bit hawkish. We’ll see. It’s going to depend on how the economy recovers from COVID. So all of these factors will weigh on this particular pair next week, but there is still opportunity there. So, with that said, this is the Vantage Point AI Market Outlook for the week of September the 21st.