Let’s look at the charts for the U.S. Dollar, Gold, Crude Oil, The Stock Market, and Major Pairs.
The U.S. Dollar
Now, to get started in this week’s presentation, we’re going to begin where we always do with that very important U.S. Dollar Index. Now, what we can assess here is that the dollar is absolutely trapped inside of this VantagePoint verified support and resistance zone. That resistance coming in at or about the 89.29 area, and the lower area of support sitting at 97.56, and we can see that the market is unable to penetrate these verified zones. Now, we would look for a potential break higher. We’ve got our medium-term crossing our long-term predicted difference. We’ve got our neural index green and our predicted differences are rising. Now, our predicted RSI also starting to advance, we’re sitting at 59.2. Now, an actual breakout point would be above 60 which would trigger further U.S. dollar strength.
Now, I’m not really anticipating that until the latter part of the week, when we look at the normal monthly seasonality here, that monthly seasonality is we normally see the dollar strong at the end of the month in the first week into the new month. Now, with a very contradictory fed statement, not surprisingly, not killing the U.S. dollar and certainly didn’t say much to help the equity markets either, so the equity’s kind of moving sideways. We’ll look at that in a moment, but right now our bigger concern is the U.S. dollar as it is involved with all of our Forex pairs and indirectly is driving gold, oil, and the S&P 500.
So for now the dollar has a slight upward biased here going into the start of the week. No real event risk until the latter part of the week, I believe it’s Thursday and Friday. We’ve got durable goods and I think a GDP reading, but nothing major before then. So I would look for the markets to remain rather sideways.
The Gold Market
Now, when we look at gold, we can see the same thing. We’ve got a verified resistance zone coming in. The current one at 15.32. The support on the downside is coming in at 14.90, 14.88 area, but the VantagePoint indicators remain very stubborn when it comes to gold. They’re still forecasting gold going higher despite that bit of dollar strength. Now, when I look at the predicted RSI at 62, it also is warning that momentum is building on these gold contracts. Now, always remember oil, or excuse me, gold, and the U.S. dollar are capable of going up together, but ultimately one will break higher and one will break lower. So for the immediate future, it would appear that both the dollar and gold could advance. Now, closing above that critical T cross long 15.13, I think we’re closing around a 15.16, 15.50m so that is a bullier sign. However, we can see that we’ve closed above it before and we didn’t have much follow through, so we’re looking for this to start to pick up some momentum going into next week.
Now, with the S&P 500, once again, when we look at the S&P 500 and we look at this over a three-month period, we’re back up to a known level of resistance. There is some chatter, this presentation being done on Saturday obviously ahead of the market, not behind it, so there is some announcement that have come out that there is some progress with the trade announcement. So we could see a pop in the equity markets right off the bat, but we know what happens. It’s a buy the rumor, sell the fact. Unless there is an actual signed agreement, then I would … Even if we do somehow get a trade deal between the U.S. and China, that’s the last bit of good news for the equity markets here, guys.
So ultimately, my view is that they will be going lower. It could be as early as next week or we could get a relief rally here based on optimism on a deal. But how many times are we going to fall for this, where we hear about this so-called optimism only to watch China lead the table? So again, I would not bank on that selling into rallies. You can see the medium-term crossing the long-term predicted difference. We’ve come up and banged into this a resistance area. If we look at the verified resistance that came in back here, that goes back to our, basically back to July the 26. We’re coming back up to this area. We have made a series of new lows here. We’re recovering, but again, we really need, the equity markets need to get above 30.40, 30.30 and stay above that area if this has any hope.
So when we look at the medium-term crossing, the long-term predicted difference with the neural index down, the RSI falling, all of this points to, after the ultimate event risk of whatever is going on between the U.S. and China on these trade talks and the so-called progress, nothing comes from that, the market simply… I’m not even sure the market is willing to buy into that optimism at this particular stage. So selling rallies remains the the primary strategy.
When we look at our correlated markets, light, sweet crude oil. Again, those drone attacks last week really did nothing. It brought the prices right back to where it started last week, pretty much. Again, this is a leading indicator for the stock markets here also, guys, oil down, the S&P 500 we’re going to continue to watch this. The key VantagePoint level 57.17, I would anticipate this area will come under pressure at the start of the week and going into the majority of the week.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD)
And now as we look at going into our main Forex payers, again, we should see more or less sideways trade action. Now, what I mean by sideways is that right now, again, the fed is not really committing to a lot of rate cuts here guys, at least that’s not my understanding. It’s confusing it is what they’re saying half the time, but the Euro is unable to break through this verified zone. This verified zone coming in one 11109, but we’ve got even stiffer resistance. You can see that if I just take a line and draw it right around this area, you can see basically four or five times almost every day, last week, the market came up to this level and then failed and then ultimately push lower on Friday. Our medium-term crossing, the long-term predicted difference, our RSI… The mixture of indicators here by the way, guys that I have is that I have pivot levels using the T cross long and the long predicted. We’ve got our verified zones that study price action and failure points in the market, we have the neural index taking the correlation of 31 other markets, and our predicted difference, which is one of the most powerful contrarian indicators that I’ve ever seen.
So when we combine these indicators together, it usually gives us a very strong directional bias. So right now I can’t, as much as I would like to and have been buying Euro-U.S., I think that shorts are starting to surface once again. So to begin the week, guys, the area between one 110.48 and 110.70, this is the area, 110.80, we have to break above this level. If we can break above this level, then we still have to be a little bit concerned here with the high at 111.09. But if we can get above 111.09, we should see a clear run higher, but I think we’re still a week or two away from that particular move.
U.S. Dollar/Swiss Franc (USD/CHF)
Now, when we look at the counterparts to the Euro, which is surprising, but yet not that surprising if you understand inner-market technical analysis, is that if the equity markets are rallying back up, by the equity markets of course I mean the S&P 500, if it’s back up above 3000 then why is U.S. Swiss Franc going down instead of up? The U.S. Swiss Franc and dollar Yen are basically S&P 500 trades, so when we look at this and say, “Okay, well wait a minute, if the U.S. Swiss Franc is actually going lower,” that in my respectful opinion is an early warning sign of potential stock weakness coming. We know the seasonality of stock selling off at the end of September, none of that has changed, right? So when I monitor this right now, if I get a breakdown below 99.01, the VantagePoint T cross and stay below that, that will simply solidify my position on shorting the S&P 500 and that a bigger move is coming. And the majority of these indicators are warning of further U.S. dollar weakness against the Swiss Franc.
U.S. Dollar/Japanese Yen (USD/JPY)
Now, if we compare that to the dollar Yen, we see a very almost identical chart here. We’re sitting right on a big level 107.46. Now if the equity markets, the Dow, the DEX 30, the Nikkei, the S&P 500, if they all start turning higher, then the dollar Yen will bounce off the 107.46. So watch for a bear trap down here, guys. I don’t think that’s what we’re going to see, but we could. The main thing is if you know your levels, then this will be much easier. So if 107.46, if we close above this level on Monday and Tuesday, then that would mean the equity markets are stabilizing and the dollar Yen and U.S. Swiss Franc are going to go higher.
British Pound/U.S. Dollar (GBP/USD)
Now, when we look at the pound dollar from last week, a very interesting trade to say the least. Now what I had warned everybody was, again, we were going to target this area up around this verified zone, essentially in the in or about the 125.80 area. Now, you’ve got key VantagePoint pivot areas down here, 123.68. But the one that you really want to watch here, guys, that I’ve been watching off and buying off of all week is the T or the long predicted, excuse me. That area is coming in at 124.70.
Now, you’ll notice how the market hugs the predicted moving average regardless of where it opens or where it closes, it always, like a moth to a flame, comes back to this blue line. The problem here with this move higher is the verified resistance at 125.80. We’re looking for a clean sustain break of 125.80, then we’re going to start looking towards the 129.130 area, but the indicators right now are saying it’s probably not the right time for this particular pair. The predicted difference is crossing to the downside, we’ve got our neural index is down, we’ve got the RSI pointing down still in a momentum-based territory, but the angle of it pointing down is saying there’s weakness. So when we look at that, we’re probably going to retrace a little bit deeper here. I would look for a move potentially towards the 123.93 area and then we can reassess. But the major zone down here at 122.84 ,not only do I not anticipate it being tested, I would look, if we get down to this area, I would still be a buyer at that particular area. Now, we still have to be careful of Brexit of course, but for now, again, it is still holding above that T cross long on VantagePoint and that’s what we need to look at.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
Now, with our three main commodity currencies, guys, when we’re looking at seasonality, seasonality is using the VantagePoint software actually quite easy. We just go back, click one year ago, and we look at what U.S. Canada did one year ago. Basically the U.S. CAD had bottomed out by October the 2nd, the same as the S&P 500, the same as oil. The S&P 500 had topped out at that level, oil had topped out, and they reversed sending the U.S. Canadian pair higher. The CAD does not like it when oil and equities are moving lower. That weakens the Canadian dollar, the Aussie dollar and the New Zealand dollars.
So if we look at that seasonality, we’re within a few weeks of reaching a bottom, we should be looking for longs. If we look at this same move two years ago, we see a very similar situation. If we go back on a three-year seasonality or a four-year, or whatever you want, you can see that the U.S. dollar is strong against the Canadian dollar between basically October, and I would say about October and mid January. So we would be looking to stay long. But right now, the pair is struggling to break through this verified zone. That’s coming in considerably lower now at 133.08. The big level that we were looking to to retest, which I still think we could, is 133.82. If we can get above that area, then this thing is probably going to start moving back to its yearly opening price around 136. We’ll continue to monitor the indicators.
The RSI is saying that, look, we still have upward momentum left here, so these are the things we want to watch. You also want to take your software, click on the F8, go back to the long predicted by itself, that pivot area 132.64. That number is updated every night in the VantagePoint software and it is a critical intraday pivot. You can see how the market is running along that blue line every single day, like a moth to a flame, it comes right back to it and it’s been bouncing off of it. So we’ll continue to monitor that.
Australian Dollar/U.S. Dollar (AUD/USD)
Now, with the Aussie and the New Zealand in last week’s weekly, I warned everybody and said, “look, we’ve got a medium-term crossing our long-term predicted difference. It’s very likely that the Aussie is getting ready to move lower.” That’s come to fruition. Now we’re breaking down below the key VantagePoint, T cross long 68.20. We need to hold below 68.20 this week, guys. If we can hold below it, then we’re probably going to take a run.
And remember, trading is still based around speculation, but when you’re using the correlation of 31 other markets and these inner-market correlations, we’ve got an edge, right? These verified zones, they give us price targets. So the price target right now on this break is 66.88, so where we are right now, we’re closing the week at the 67 64 areas so there’s not a whole lot of downside here, guys. We’re going to be watching this one very closely. But again, if you’re looking at those seasonalities and you look at this from one year ago, you see that the Aussie did go lower right until basically the end of October. If we look at this for again two years ago, we see the exact same thing, the Aussie was very weak at this time of year. And on a three year basis, once again the same thing, so the likelihood the Aussie continues to move towards that 66, 65 area based around the VantagePoint forecasts and the seasonalities, it’s very, very high.
New Zealand Dollar/U.S. Dollar (NZD/USD)
The same thing guys happens to be with New Zealand, it’s already advancing and penetrating below this verified zone, which was a very powerful zone on that corrective move. But once again, we’re pushing below it. So we want to continue to monitor this. When we look at this again from one year ago, the New Zealand, it actually started to bounce back in October. It’s not the exactly the same if we look at it two years ago… Excuse me, we see something very similar. The New Zealand not quite as weak as what the Aussie is, and again, something very similar three years ago. So yes, seasonalities are very important in our trading. That is absolutely true. And a quick, easy way to do it, take your VantagePoint software back a year and just see what it did on that trading day one year ago.
So again, we don’t have an overly busy week, but it’s in my respectful opinion, the market is still trying to digest this very confused FOMC, so watch out for further volatility to start the week. And as I tell everybody in the live training room and my own direct clients, never take a trade on Monday, guys, until at least 12 noon. Let all the markets come back in, let things settle, and then we see where we’re at.
So with that said, this is the VantagePoint AI Market Outlook for the week of September, the 23rd, 2019.