The Vantagepoint Forex Weekly Outlook is designed to help traders. It’s important to remain aware of correlations in the global markets. Traders can become more profitable if they know how to get ahead of the trends. Utilizing the predictive indicators in VantagePoint Software can help traders find the right trades and the right times. Above all, traders know when to enter and exit those trades for maximum profit. Let’s look at the charts for the U.S. Dollar, Gold, Crude Oil The Stock Market and the Major Pairs.
Hello everyone, and welcome back. My name is Greg Firman and this is the Forex Weekly Outlook for the week of July the 29th 2019. Now just to get started, we’re going to begin where we always do with that all important US dollar index. Now this coming week will be a make or break week for the US dollar, for the S&P 500, for gold and it’s all centered around the much anticipated FOMC statement, but in my respectful opinion, again, this is all just noise. I believe the Fed has it wrong. If they do cut rates, the incoming data does not support it. I believe it will be a one-off rate cut and that’ll be the end of it, but we’ll have to see. Either way, we have the FOMC on Wednesday, the non-farm payroll number on Friday. It is going to be a very, very choppy week.
Now what we aim to do here with the Vantage Point Forex Weekly Outlook is to try and assist traders into seeing some of these potential outcomes. Now when we look at the dollar index right now, we have critical support down at 96.96 but again, what looks like a clear free lunch here for the dollar clearly is not. We have multiple levels of verified resistance going back multiple years all the way going back here, you can see to March of 2017, this resistance is all sitting up around the 98.30 level. Very little has changed. This is nothing more than a full retracement from the swing high back in again, December 2016. We’ve come down, put a low in, down and at or about February 2018 we’re rising back to a level where we’ve already been guys. But the probability of a significant failure on the dollar index still looms quite large here, in my respectful opinion.
So when we’re looking at the indicators going into this FOMC announcement, we’re already moving into an overbought condition. We’ve got resistance up here and any kind of rate cut is unlikely to support the dollar. But what I will point out is that the dollar is normally strong in the first week of the new month regardless of all of this economic noise that’s in the market. So again, the probability that the dollar sells off at the end of next week is very, very likely and the further we move away from 96.96 the more likely it’s going to retrace back to this area.
The S&P 500, guys, is absolutely following the dollar gains. You can see here as the S&P retraces, the dollar retraces, then they go higher together. So if the dollar, not if but when the dollar crashes, it is very likely to pull the S&P 500 down with it.
These kind of inner-market correlations are invaluable in my respectful opinion. We want to continue to monitor this. Right now 29.91 a retest of this area by Wednesday is imminent guys, nothing goes straight up and nothing goes straight down. We do have a fresh buy signal forming here, but again, this is a Fed-induced by signal. This is not, in my respectful opinion, based around demand for equities. it’s certainly not based around the macroeconomic factors that should be driving the equity markets. So again, I would be very, very cautious buying these equities at this particular level going into this Fed announcement.
The Gold Market
Now when we look at gold going into next week, we’ve had multiple retracements, actually four days in a row to this critical VP level at 1426. Now gold probably going to come under a little bit of pressure, but the next move on gold is going to be determined by the FOMC. But in my respectful opinion, again, this rally has been in play since May 30th, we’ve discussed this over and over and over again in the Vantage Point live training room that longs are definitely the play and I don’t see anything that would suggest that getting long on gold or buying gold on dips is not a decent play. Respecting the dollar, the equity markets, and the Fed. So right now for this week, we’re going to keep a very close eye at this critical VP pivot area, which is 1426. We’ve closed the week at 1432. We’re going to see some choppiness in gold, guys, but ultimately it’s likely to move higher.
Now as we look at oil for next week, again, only in my respectful opinion, looking at the indicators that we’ve got a good base support forming here down at 54.85, oil is likely to extend higher regardless what happens with the S&P 500 or the global equity markets because we’re in summer driving season, so still going to be demand real-world demand for oil. You can see we’ve got a buy signal forming. The medium-term crossing the longterm predicted difference. We just need the neural index to turn green and away we go. We are anything. We are absolutely not overbought. We’re actually coming out of an oversold condition, which again fuels a potential rally in these oil contracts.
But at the same time, we can’t rule out that if we break through down through the 50, 54, 85 area, that oil could not move lower if the equities really crashed. So keep a very close eye on the S&P 500 if you’re also trading oil contracts because right now, guys, have very, very high inner market correlation between these two.
Forex Weekly Outlook for Major Pairs
Euro/U.S. Dollar (EUR/USD)
Now as we go into the Forex market, the first pair, of course, we always want to look at as the Euro/US, we’re down here again in this major support area. Brokers are absolutely going to try and the banks are going to try and run stops below 110.84 but in my respectful opinion, the Euro is a buy on dips here still. Now you can see all of this support holding here. They want to try and take out all the buyers at this 110.84 area, so it will be a question whether they can or not. But again, these stops that the brokers will try and run, we have to be very careful because ultimately if the Fed is going into a rate cut cycle, then it’s unlikely to favor the US dollar. Now the Euro, obviously the ECB is not going to be hiking anytime soon either, but this level, looking at these verified support zones, we want to back this out to see where this Euro support is.
Now, if we were to lose this 110.84 and break lower than it is, we still have additional support down at 109.23. So if we break through that level that I discussed at 110.84, we still have a potential long here down around 109.23 where, at that time, the brokers and the banks will have flushed out all the long traders, they’ve taken the market lower. But always remember how this works, they have to take it lower before it goes higher. But on our first retest of this support area, it’s held and we do actually have a buy signal. Our medium-term crossing, our long predicted difference, one of the most powerful indicators in the Vantage Point software, we’re simply waiting for the neural index to turn green and that will essentially give us the green light to start buying this from a heavily overbought condition, oversold condition. Excuse me.
U.S. Dollar/Swiss Franc (USD/CHF)
Now with the US-Swiss franc, the US-Swiss franc has been a very odd pair. The interest rate differential between these two favors longs on US-Swiss franc, but even with this equity rally for the calendar year, this particular pair has not been able to get above 102, so the medium- to longer-term outlook is still very negative on this particular pair, even with those interest rates. But remember if the Fed cuts that interest rate differential between the Swiss and the US will start to shrink making shorts even more attractive.
So if we get into a risk off scenario, equities crash, then we would expect US-Swiss franc to fall also. Right now we do have verified resistance at 99.52 and in an even bigger level up here just at about the parity level, so watch this area up here for a potential short because the rise in the predicted RSI is very, very steep. We’re sitting at 83.1, probably a little bit more upside and then down we go.
British Pound/U.S. Dollar (GBP/USD)
Now going into the pound dollar for next week, again, a very tricky pair to trade right now. I’ve advised my own direct clients to be very cautious with this pair or stay away from it. A lot of political turmoil with this in the UK right now with Brexit back on the table yet again, but ultimately we’re going to be looking for longs here. Now we’ve got good support at 123.84, but politically, that level is likely to be challenged. So as I continue to monitor levels down here, again, the beauty of the verified zones is that we can back this out to multiple years to find support levels. Now I can find a little bit more down around 121.53. If there’s further political unrest in the UK, I can’t rule out 121, 119 level, but I think at this time it’s very unlikely, guys.
I believe that the dollar is going to be, is gonna receive, maybe not a deathblow, but it’s going to take it on the chin here on Wednesday I believe, and going forward into August and more importantly September. So we’re going to be looking for longs on this pair. Right now our key vantage point level is coming in at 125.01. The further we move away from 125.01, the more likely it is we’re going to retrace to it. So keep that in mind here, guys.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
Now as we look at our three main commodity currencies, surprisingly with gold, very firm right now. We’ve got a buy on US Canada, but this is more about interest rates. The Bank of Canada, FOMC, Bank of Canada has clearly stated, they’re on hold, so the Canadian dollar is under pressure here. But if oil starts rising and gold starts rising, then the Canadian dollar, the Aussie dollar, the New Zealand dollar will all rise with commodities. So we’re moving into a verified zone. We’ve had a big push up on Friday, but we’ve closed flat on the day here, guys. We opened at 131.63 and we closed at 131.64, not exactly a bullish day, right? So when we look at this and its Friday trade, I would be very, very cautious with longs at this particular level. Only if we break above 132.60 should we start to think more about longs right now.
Selling rallies is a reasonable play, the predicted RSI heavily overbought. Medium-term getting ready to cross the long-term predicted difference to the downside. So it’s just a matter of time here now, guys. Now another way to look at this too is we bring in our long-predicted, that area is 131.37, if we can close below 131.37, then shorts would be on the table immediately, guys. So watch for one more push on Monday, then a likely reversal lower on for the rest of the week.
Australian Dollar/U.S. Dollar (AUD/USD)
Now with Aussie, US and New Zealand, US, they are clearly under pressure here, but again, I’m expecting a recovery from this lower verified zone, 68.32. Now we’re closing the week again when we look at the close of the week, I think we’re closing around 69, let me just get that exact number. We’re closing at 69, approximately 69.08 to be specific, so a little bit lower, guys, and I would be watching for reversal longs on dollar weakness down around this 68.32 I liked this area. I like this pair and, again, if the interest rate differential between the Aussie and the greenback is going to start to, it’s not widening, it’s narrowing guys. So remember that, as the interest rates start to move lower if they start to move lower in the US, the US dollar becomes less and less attractive. In the Forex market, we’re basically either buying or selling US dollars, so this week is a big one for determining this, but I believe that this is more of a balancing act than anything else between the Federal Reserve and some of the other global central banks.
They’re sending it lower because I believe, and only in my respectful opinion, that this kind of balancing act is they’re going to send it lower because they know that ultimately the Aussie is going to strengthen again and as is the kiwi, will likely strengthen against the dollar. So let’s do a little bit of a balancing act. You do this, we’ll do that. So again, watch for longs on this particular pair.
We’re going to be watching the medium term crossing the long-term predicted difference in combination with the neural index. And again, if you click on F8 in your software, you will get a very powerful pivot area. The long-predicted, that long-predicted now coming in at 69.79. The further we move away from this number, guys, the more likely it is we’re going to at least retrace to it. Okay. There is no Fibonacci number around this blue moving average. It’s a predicted moving average that takes the correlation of 31 other markets when it forecasts the target markets. So like a moth to a flame, the market will move away from it, but ultimately it will come back to it, so keep that in mind.
New Zealand Dollar/U.S. Dollar (NZD/USD)
The same thing applies to the New Zealand dollar, New Zealand, US payer, excuse me, but this pair here, our target area for longs are going to be down here about 65.68. We’re very close to that closing at 66.33 so maybe another 40, 50, 60 pips lower and we start to look at longs. The very steep decline in the medium term predicted difference, we’re already in oversold territory. All of this points to the dollar selling off at the end of next week. Now we’ve got to watch the non-farm payroll number next week. It could be a good number, that could help the dollar. I don’t think the Fed is going to help the dollar, but they could. If they do a one-off scenario, the market could take that as the dollar is not as weak as what they think it’s going to be. So a very tricky week here, but hopefully this Weekly Outlook will help guide you through a very turbulent market next week.
So with that said, this is the Forex Weekly Outlook the week of July the 29th 2019.