Hello, everyone, and welcome back. My name is Greg Firman, and this is the Forex weekly outlook for the week of June 10, 2019. Now, to get started this week, we’re going to begin where we always do with that very important U.S. dollar index.
Now, with the dollar index, you can see that we’ve had a pretty substantial sell-off. Now, the dollar is normally weak, during… the course of the end of the first week of the new month, usually, that’s when the dollar is at its weakest. I’m not convinced at this time that the dollar is just going to sell-off. You can that, basically here, that I’ll outline this for everybody, that we’re largely still within the overall broader range. The dollar still very much positive on the year, the dollar may be down, but I don’t think it’s out just yet.
Now, when we identify this range that we are in we can see that we’ve got some very strong support sitting at the lower $95.85 area, and more significant support coming in toward the $94.65 area. I would say in my respectful opinion that if we can break through the support at $95.84 then we are going to go lower, but I do also anticipate the lower end of that range to hold.
Now, when we look at the vantage point indicators we can see that the predicted differences, and the predicted RSI at 12.3 are already becoming oversold. Now, our key pivot area on the upside for this week, $96.83. If we can retake that level the dollar will recover, but I don’t anticipate that, that’s going to happen knowing the normal dual dollar cycles being weak in the middle of the month, strong up end of the month.
The Gold Market
Now, how this is effecting gold right now we can see that gold has made a big push up. The one thing I will point out very clearly here guys, when were talking about the non farm payroll number on Friday, I know that a number of analysts and pundits are saying how, what a horrible number it was. In actual “fact” here guys, it wasn’t really that bad.
Now, what I mean specifically by that, if we look at our U6 number here, we can see that… during the courses so far in 2019, one time about a year ago in 2018 we hit 7.3 million, but you can see that March, and April, and February actually were at 7.3 million, now the U6 number measures the broader unemployment, that’s basically the total unemployment, plus all persons marginally attached to the labor force. So, were looking at the broader unemployment, not just that U3 numbers, so we’ve gone from 7.3 million to 7.1. That is an excellent number guys! Let’s not lose sight of that, that’s two hundred thousand more people going into the market, not out. The U3 number is a survey headline number, that’s basically revised up, and down, and all over the place, but the U6 is not revised. So, when, I look at that. Gold has made a big push to the upside.
Now as I’m doing this presentation, it’s my understanding that a deal has come on the U.S., Mexican tariffs. That’s another positive for the U.S. dollar, and probably a positive for the equity markets to start the week, which I’ll talk about in a minute, but for now, what we look at here now is any kind of needle in the haystack, that tells us something may not be what it appears to be. So, when I look at this, our medium term, crossing the long term, predicted differences, warning us that gold may not be as strong as what we actually think it is. So, we should watch this level vary, very closely. If we can’t progress on gold and advance higher, then I feel we may have a problem here, and actually it may be gold that weakens.
So, as we back our chart out, we can see significant resistance at the $1361 area. So we want to be very cautious because essentially, the vantage point software is warning us that we could be reversing here. The medium term, crossing the long term predicted difference, to the downside. Plus we’ve got a heavily overbought RSI. Now our neural index is still positive, but if that neural index turns from green to red, we definitely want to start looking at shorts.
Now, with the S&P500 we’ve got a big push up, but once again, in my respectful opinion only, for all the wrong reasons here. Now, what I had talked about this week in Vantage Points live training room, we identified this major swing low, down at the… basically around the $27, $28, $27.30 area. The market hit that verified zone in the Vantage Point software, to the number and then rallied off that to were we are now. But now we have significant head wins up top, all the way up to the $29.60 area. Now again with those tariffs now, not being put on to Mexico, this should push the equity market higher. But, more specifically the FED wants once again interfering in the markets here. Suggesting there’s going to be multiple rate hike cuts in 2019. I am not in that camp in the least.
The only thing I know about the FED, guys is they constantly get this stuff wrong. And three rate hikes when a U6 number is at an all-time low at 7.1. The additional numbers come… I don’t disagree the economy is slowing a little bit, but three rate hikes. Guys that’s a little much for me to swallow. So, I don’t rally… I’m not really on board as usual with the FED, but, again, we’ll wait and see, but for now, this is where the equities are getting their fuel from. They’re getting it from the FED. They’re getting it from, you know, the… potentially now the reversal in the tariffs.
If I didn’t know any better, I would actually think that somebody knew that, that tariff was not going put on, and that’s why they were buying these equity markets. But again, when we look at this, our medium term, crossing our long term predicted difference, off of that verified support level led to the rally where we are now. But remember, we’ve got significant resistance at $2824, and of course $2960.
Now with oil. Oil is clearly following the equity into the move on the equity markets, as the equity markets recover, as I had talked about in last weeks Forex weekly outlook. The direct inter-market correlation is to oil, so oil recover if equity. So, if equites turned back down, oil will follow. Right now were still… The main indicators in Vantage Point, are pointing toward a corrective move, towards our T-cross long at $57.13. So, oil and equities I think they have a chance of recovering next week, but once again we have to see how the market reacts to the non farm payroll number on Monday, and to the fact that Mexico will not be getting those tariffs put on them.
So, this brings us to our first Forex payer, the Euro U.S. payer, the most heavily traded Forex payer in the market. We can see that we have taken out this major resistance level, here, that level has been identified, and has been in place as early April. That area coming at $13.23. We are closing just above this area. But, guys we’ve got to be very, very cautious of a bull trap here. Now what I mean by that specifically is that if gold reverses, the Euro has a very high inter market correlation, and if gold turns lower, the probability is the Euro will follow. So, right now were coming up into a very strong level of resistance, between $13.23 and this major level, at $114.46, But again the U.S. dollar is usually weak at the end of the first week of the new month. So, I would anticipate a little bit more strength, but be very careful up here. The indicators from Vantage Point, already moving into overbought territory, yet still positive.
But overall, once again guys, remember when you hear that the Euro is trending, or its not trending, just remember we’re in a very identifiable range here. We have not traded outside of this range in the last three months. So, until this range breaks, the Euro is not in a trending move. Very important that we identify that. Also using the Vantage Point indicators, warning us that this range is still likely to remain in place.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD)
Now, as we look at the Euro, U.S. counterpart, the U.S., Swiss Frank. Still moving lower, but we’ve got some heavy support down here. Right now, last weeks big push down. After that recovery, we hit a low point of $98.54. We want to watch $98.54 to see if we can move it lower. Remember your direct inter market correlation. If equities turn around, then its very likely that even if the dollar is week across the board, the dollar can make gains against the Swiss frank, and the Japanese yen, if we shift from a risk off, to a risk on environment. So keep an eye on that, but to start the week, it is going to be dependent on what happens with the global stock markets.
U.S. Dollar/Swiss Franc (USD/CHF)
British Pound/U.S. Dollar (GBP/USD)
Now, looking at pound, dollar coming into next week. The indicators from Vantage Point are warning that the pound, dollar is getting ready to make a move. Now, the… pound has been mired in conflict because of Brexit, Theresa May leaving office, a lot of different things, but the indicators are warming up. They are not over bought, in the least. We have just have to clear. We have just closed above the Vantage Point T-cross long at $127.28, were closing $127.30. Not a huge move above, but were looking to build on this. If we can talk out this verified resistance, sown by mid week. That area coming in at $128.10. That will open the door back towards the $131.76 high, from May.
So, that is our target for next week, on dollar weakness. The RSI still has plenty of room to move. The position of the predicted differences that are fully backed by the neural index. It looks like we have a decent opportunity here. Now, when we look at the individual cross overs. Our short term is good. Our medium cross over is good. And were clearing our long predicted. And we can see how the market using that long predicted, on a daily basis, for the last five trading days as a pivot area. This is wear the market participants are buying. That current level $126.95 longs off the open on Sunday, are supported by this analysis.
U.S. Dollar/Japanese Yen (USD/JPY)
Now, with dollar, yen. Dollar, yen has very, very significant support here guys. Down as low as $107.75. We could see a reversal. Next week could be a very good opportunity for buying dollar, yen. We’ve got a signal on the predicted differences. We’ve got this low support at $107.77. We could be moving into a risk on environment that is an absolute positive for dollar, yen, and U.S. Swiss frank.
Even as I said with dollar weakness. So, watch that level around $107.75 or even the $108 level to round it out. If we can hold around this level, then the market should use this as a springboard, to correct back to the T-cross long at $109.15.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
Now, looking at our three main commodity currencies. The CAD, unlike the U.S., did have a very strong labor report. But again, my argument is that labor report from the U.S. was nowhere near as bad as some of these retail websites are suggesting. I actually thought it was a pretty decent number, even though the U3 was down. My argument is based around the U6, and that we’re still range trading.
When we look at the overall range on U.S./Canada, there’s an 80% probability that was going to have order flow traders coming in down around this $132.50, entirely possible. But if we loose that level. That is likely going to open up the door to a much deeper move, to the downside of this pair. Potentially towards the $130 area. So, keep that in mind. But right now, the indicators are… I feel that we need corrective move first, before we.., if we make the next move… the next leg down, we need a corrective move first. That move would likely come on Tuesday. Not on Monday. A lot of times with U.S./Canada its a continuation from Fridays trade, only to reverse on Tuesday. So, keep that in mind guys.
Right now the indicators from Vantage Point are moving into heavily oversold territory. 12.3 on the RSI. The predicted differences are moving into oversold also. So, like I said, if nothing else, I feel were going to get a corrective move back towards our long predicted at $133.81. So, if were looking at potential shorts we would like to see the market move higher first.
Australian Dollar/U.S. Dollar (AUD/USD)
Now, with Aussie/U.S., New Zealand/U.S. Once again here guys, lets not lose sight of what the actual trading range is. When we look at the trading range here. Nothing is changed. Were still within this range, where we’ve been. Were at the lower side of that range. Now, when I look at this and I say “Okay, we’ve got a fresh triple AMA cross, we’ve got good support at $69.59”. The only downside that I see right now is we have form able resistance, and that starts at $70.47 and goes to the next level at $70.68. If we can break through $70.68 and close above that, then we’ve got a real shot of breaking back out to the upside. That’s what we want to look at.
New Zealand Dollar/U.S. Dollar (NZD/USD)
Now, we’ve got again, warning signs from the Vantage Point software. The medium term crossing the long predicted. The…the predicted RSI, and heavily over bought territory. So, we want to see if we can push through this resistance, but if we start failing around $70.47, $70.68, then shorts will be back on the table.
Now, our final commodity pair, very similar to Aussie/U.S./New Zealand. New Zealand so far in the month of June guys, is the strongest currency in the Forex pair. What a difference a couple of weeks makes, isn’t it? Last week…last month the Aussie and the New Zealand together were down almost 16% against their G7 counterparts. They’ve managed to recover, there moving higher. But again, we’ve got form able resistance here. The first level that we must break through here. That high is coming in at $66.85. If we can get above that area, our next verified zone is not until $67… basically about the $68 mark. So, right now the New Zealand looks set to move. But again, a corrective move on a number of these currencies first. Yeah, certainly… appears to be in the cards. Currencies don’t just break out. What they do is they usually correct a little bit, after they’ve made a significant move, which is what Aussie, the New Zealand, and the CAD have done. Once they have a corrective move they’ll make the next leg.
So, keep an eye on out for that. But again, we’ve got a busy week ahead of us again next week.
So, with that said, this is the Forex weekly outlook for the week of June the 10, 2019.