Let’s look at the charts for the U.S. Dollar, Gold, Crude Oil, The Stock Market, and Major Pairs.
Hello everyone and welcome back. My name is Greg Firman and this is the VantagePoint AI Market Outlook for the week of October the seventh 2019.
The U.S. Dollar
Now to get started this week, we’re going to begin where we always do with that very important U.S. dollar index, but again, we will be looking at all of the major markets, not just the Forex, so when we look at the U.S. dollar, we can see the U.S. dollar here was accurately predicted that it would move lower as we discussed in last week’s AI Market Outlook, that the dollar index based around the medium-term crossing, the long-term predicted difference with a falling on RSI side was going to see the dollar weaken. We saw the Euro rise, the British pound rise, all of these again, they very briefly rising at the beginning of the week, only to reverse on Tuesday. I would expect the exact same thing this week, however, against the U.S. dollar.
Now, the one thing we do want to always look at after the nonfarm payroll number. To really look at the unemployment. What I’m seeing here, I’ve gone all the way back to show everybody back to 1994. I have never seen a number this low at 6.9 on the U6. Now once again, this points to a very strong employment market in the U.S. Again, we’re not seeing any … The U6 number in my respectful opinion is the real unemployment number. The U3 bounces all over the place. It’s a headline number or a household survey number. The U6 does not get revised. This is the numbers, so you can see again the best we’ve seen back, I think back in the Bush years actually around 7.3 which was very good, but again, even going back into the Clinton years into the early 1990s we’re not seeing any number That’s this low and that’s why the unemployment rate is dropped to 3.5 and again, an excellent, excellent number.
Now inside of that labor report, of course, the manufacturing lost jobs, but remember guys, the same thing that we’re using in our trading, which is the VantagePoint AI. AI is taking over automation, so manufacturing jobs are naturally going to shrink in my opinion because of this. So again, when we look at the inner market correlations here. Right now, again, gold rising this past week, I’ll talk about that more in a minute, but this does point to further … Even though we’ve seen a very good labor report, the dollar is still likely to weaken. I’ve talked about this in the VantagePoint live training room on these market outlooks. Again each week that often the price on Monday is fake, so we would look for the dollar to rally on Monday, only to turn around and sell off from Tuesday to Friday. That is what we’re looking at. The VantagePoint indicators, again, support that analysis. We’re looking at the medium-term predicted difference, the RSI, if we can get the RSI breaking down below 40. This thing is likely going to run.
The Gold Market
Now, if that is the case and this comes to fruition, what’s being predicted here, then gold would continue to rise. We can see we’ve closed two days above our T cross long this critical pivot at 1,509. Now gold’s not super strong but it’s strong enough and it’s sitting right in the middle of the range. Now we’ve again, we’ve got our medium-term crossing our long-term predicted difference. We’ve just got to get this predicted RSI moving a little bit in my respectful opinion above 60 to start building momentum. I believe we have a good shot of that happening. Come Tuesday, by Tuesday of next week or Wednesday. Again, this presentation is not being done … Is being done prior to the market open, not after.
So again, we’re talking about what’s going to happen, not what’s currently happening. So right now we’re holding above that, which suggest we should be able to make a move back towards the 1,543 but we’ve got to be a little bit cautious because again, that labor report, despite what you may have heard, there is no arguing with that drop to three and a half percent on the unemployment rate in a 6.9. A 30 plus year low on the U6 numbers. So that has my optimism slightly guarded on dollar weakness, but I feel that the market will follow these monthly seasonalities, where every month the dollar is weak at the end of the first week of the new month. So again, we’ll see if that comes to fruition. Be very cautious right now. And if you’re buying gold, just make sure that all of your stops are below the 1,465 mark. We don’t want to get stopped out anywhere between these verified zones.
Now with the S&P 500. The S&P 500 has recovered off of that labor report. But remember that does … The labor report does not null and void the ISM numbers from last week 47 and 52. That is showing contraction to me. Fifty, we’re still above on the non-manufacturing but the manufacturing 47 is clearly showing contraction here, not expansion. So, remember that guys, when we’re looking at this right now, the S&P, we would look for again for this to rally on Monday only to potentially sell-off on Tuesday and Wednesday. Now again, we’ve come up hit this 2,955 mark and again, some people had sent me some emails saying, well we heard that there’s going to be this big rally up and that’s likely true, but remember guys, that this is a corrective move higher.
We are still well within this channel where the S&P has been trading and the unemployment report helps the S&P but it basically hit a brick wall at 2,955. It just stopped dead on this key T cross long, our VantagePoint, longer-term pivot area. So we’re going to continue to watch this area, but be very, very cautious of a bold trap you’re going into next week.
The same thing would apply to light sweet crude oil as the equity started to rebound oil rebound, but very, very slightly. Again, the seasonality here is that oil is very seldom strong at this time of the year between now and December. So I would expect further weakness. We do have a corrective move here. You can see the medium-term crossing, the long-predicted difference. Suggesting we’re correcting higher but only a sustained break of 55.25 that T cross long would take the pressure off the downside.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD)
Now as we start to move into our main Forex payers here. Starting with the Euro U.S. pair. Now again as we talked in last week’s Forex weekly outlook that we wanted to be very, very cautious of a bear trap down here and once again that’s exactly what it was as the market did not look at these in our market correlations with the dollar index with gold, with the equities and I will point out that the Euro is has been inversely correlated to the S&P not positively correlated. So essentially the S&P 500 goes up, the Euro goes down and vice versa. Now the Euro is absolutely struggling with this 109/84 area. The VantagePoint T cross long. We’re looking for a sustained break of that area to start to move back towards the 111 area. That’s what we’ll be looking for by mid-week.
Now again, few factors could change things here and we do have talks with China and the U.S. trade thing coming next week. I don’t see any of that coming … Anything positive coming out of that. So again, that indirectly benefits the Euro currency. Our indicators from VantagePoint are actually warning us that we could be building momentum. We’re at 60.8 which again is not overbought and it’s showing that momentum is building to the upside. So if we get gold moving, the Euro should move up with gold and the equity markets move lower.
Again, another positive for the Euro currency.
Now with the Euro’s counterpart, again, one of the things we want to make sure that we’re looking at here too is again the U.S. Swiss Franc, but also Bitcoin. I talked about Bitcoin in last week’s Forex weekly outlook that, we had some pretty significant support down here on Bitcoin. Now if the dollar sells off, what we anticipate for that to happen than buying Bitcoin in the 7,783 area could be very good. Now we’ve got resistance clearly pointing to the resistance at that high of 8,520. So if we can break above 8,520 and we can break above the T cross long at 8,704. Then Bitcoin could be getting ready to make its move on this dollar weakness. That’s what we want to make sure we’re looking at.
U.S. Dollar/Swiss Franc (USD/CHF)
Now that trade would also indirectly spin off into a U.S. Swiss Franc short. You can see that I’ve drawn a black line across here. We’ve got resistance building are RSI is losing momentum, so we would look again for potential shorts after the equity market sell-off. If the S&P 500 is going higher than dollar-yen and U.S. Swiss Franc will go higher, but again, dollar-yen is not budging. It’s staying lower. We’ll talk more about that one in a moment. But for now, we want to watch this 1.0026 area for another potential short, come Tuesday and Wednesday, possibly even on late day Monday.
British Pound/U.S. Dollar (GBP/USD)
Now how that will affect the British pound. The British pound is trying to recover here. We’re pushing the limits, 1.2341. We’re closing the week at again, 1.2331. Just under this T cross long, but you can see how very similar this pair looks to Euro U.S., Euro U.S. and pound dollar, virtually the same, almost the same trade here guys. So if the dollar weakens across the board, we want to look for longs on the pound and the Euro. Not to mention some of the other pairs, but these are the two main ones. We still have Brexit to deal with. But as you can see, our medium-term crossing our long-term predicted difference with our neural index in a rising, RSI does point to longs.
Now, what I would expect again for Monday is a significant push lower only to see it reverse higher on Tuesday. Be very cautious because there’s a very clear pattern at the start of each week, where they get the market going in one direction and then the retail traders all get stopped out on Tuesday. We don’t want to fall into these types of traps. Okay, guys.
U.S. Dollar/Japanese Yen (USD/JPY)
Now when we look at the dollar-yen, again as I talked about last week, we want to be very cautious around this 106.96 area. I would expect the dollar-yen again to rise significantly on Monday with a further rally in the S&P 500 only to be met with a reversal come Tuesday and Wednesday. Clearly, money is going into the yen, not the U.S. dollar. so we’ll continue to monitor these inner market correlations. A corrective move higher is perfectly normal, 107.46 is the area we want to watch very, very closely.
If you want to take this one step further, we look at our long predicted by itself. The predicted moving average standing on its own merits at 107.32. So it’s very easy for us to identify these resistance levels. If we break above them, then we would look to target the higher … The next high. But again, as I said in last week’s Forex weekly outlook, a premium short would be in this 108.45 area. We came up to the VantagePoint verified zone and it dropped like a wet bag of cement, didn’t it? So these are the kind of trades we want. We want to let the market come to us. We do not want to chase anything, okay guys. So watch the levels I’ve talked about. We could see a very good short opportunity after a corrective move higher.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
Now with our three main commodity currencies, the U.S. CAD, there’s still not a whole lot of love for the Canadian dollar here. At this time of year, guys, the seasonality is oil is weak, which means the Canadian dollar is weak. To easily check your yearly seasonalities just go back from one year ago to this date. You can see this huge rally up on U.S. Canada. If we go back two years checking the seasonality there, basically the same thing. We go back three years again, you can see it. It’s not a period of time when the Canadian dollar is overly strong.
Now, Canada does have an election coming up in the next couple of weeks and it could be a game-changer for the Canadian dollar. We’ll have to see, but again, if the Canadian liberals get in, that would probably not be good for the Canadian dollar, but we’ll be monitoring all of this very closely, but right now we’ve got to break through this area here guys. We’re getting through the 1.3340 but we’ve got to at least come up and test the 1.3380. If we can break through 1.3380 this pair can absolutely run higher.
Australian Dollar/U.S. Dollar (AUD/USD)
Now with the Aussie. The Aussie has had a nice retracement as we discussed last week’s weekly outlook. It’s starting to turn around, but once again it’s hit a brick wall on this T cross long at .6769. We need to break through this level, guys. If we can break through that level, we’ve got a real shot of retracing back up to the .69 level. That’s what we’ll be looking for potentially next week and the week after. But again, if those stocks crash and we get into a risk-off environment, my concern would be that the Aussie would be affected by that. So right now, the Aussie very, very significant support here going back two months, looking at these verified zones. Again, I talked about them last week down around the .6677 area and sure enough, the buyers came back in and started picking this thing up again. So we’re going to look for that to continue.
New Zealand Dollar/U.S. Dollar (NZD/USD)
That would also indirectly apply to our New Zealand currency, New Zealand and U.S. and Aussie U.S. virtually the same trade, the New Zealand, a little bit more bullish, but also has a more significant resistance zone at this verified zone at .6348. So if we can take out 63/48 and the indicators suggest we can. Then, and only then can we rise towards a high of .6450 but again, very significant resistance up here. And you can see how we go from a light red, or almost a pink color to this heavy red zone up here. And these verified zones help traders understand that just because we have a blue line crossing over a black line does not necessarily mean it’s going to go higher if you’ve got price action or order flow traders sitting here waiting. So with that said, this is the VantagePoint AI Market Outlook for the week of October the seventh 2019.