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 May the 6th, 2019. Now to get started this week, we’re going to begin where we always do with that very, very important US Dollar Index. We’re also going to review our major commodity futures, but more specifically the S&P500 oil and gold, and of course our major Forex pairs.
The US Dollar Index
Now when we look at the Dollar Index, we can see that the Dollar Index is hung up here on major support as identified by the VantagePoint’s software, 9719, we’re basically closing right on that level. We can assess here that we’ve tested that level multiple times. We were able to breach that level, but not close below that level after that. Once again, very contradictory Federal Reserve. So when we look at this, the market immediately recovered in a very, very mixed statement on the Fed.
Then of course, surprisingly, the Dollar sold off on Friday on a very, very positive US Jobs number. Now the current administration doing a fantastic job with the US economy. Again, in my respectful opinion, we’ve got 3.6 on the Jobs number are U6 number is stable at 7.3 million. Everything looks good there. So at the current time the signal is quite mixed here. Now again, the market is still looking for a dovish Fed, which I don’t think they really got. And they’re looking for a softer unemployment report to tame inflation, and we didn’t really get that either.
So once again, the Dollar could rebound here. But what we want to make sure is that we’re identifying these verified support levels. Right now that’s coming in at 9747 but the area that I’ve also got my eye on is down at the 9636 area. As long as we’re holding above this area, the Dollar should hold its ground. Now we also have verified resistance that area is coming in at 9808. The broader trend here though is still in a little bit of trouble here. As we look back over the last two or three years, as I usually do in most outlooks, you can see we have this additional resistance up here, so the Dollar still absolutely has some work ahead of it, but for now if we were to base our decisions strictly on fundamentals, the Dollar is still quite stable.
The Gold Market
Now this shows itself in my respectful opinion, again, only, that it shows itself by via gold contracts. Gold contracts are unable to breach through this critical VantagePoint level. At 1285. Holding firm we still have very good support on gold, on the downside that’s coming in at 1267, in additional support down to the 1239 area.
But once again, this is pointing to some degree towards Dollar strength, not Dollar weakness. If the Dollar is really his week is what they’re trying to tell us, then gold would have pushed higher, and you can see its had basically one, two, three, four, five, six attempts to break through this critical VantagePoint level. And it is failed at that level every single time. Now our RSI is recovering. Our neural index is still pointing up, but we must break and close above 1285 at least two days in a row, if the Dollar is really going to weaken here.
Now the same thing I’m seeing right now in oil contracts. Oil following gold, lower. Once again, this is pointing us towards US Dollar strength, not US Dollar weakness. So I think the Dollar still has a little bit more strength left before it sells off towards the middle of the month. So right now these direct inner market correlations guide us along that path to tell us how strong or weak the Dollar is. And of course, that directly affects us on our main Forex pairs.
Forex Weekly Outlook for Major Pairs
Now after that very choppy Fed on Wednesday, of course, the equities were pounded lower. But we still have very significant resistance up here at the all-time highs at 2960. We know that every time the market has put in an all-time high, there’s been a very significant selloff shortly thereafter. Right now, at least for now, there are not any real signs in the VantagePoint software that’s happening. We’ve had a corrective move down to this 2913 area, two, three days in a row. You can see how it’s using the T-cross long at 2917 as a longer-term pivot area, but again, we must break free and clear of this 2960 area if the equities have any chance of a longer-term rally.
Now, once again, with the Dollar Index being a leading indicator, it also tells us with Euro/US that the Euro is still structurally very week. We’ve had a big spike higher after. Again, that very confused Fed is terminology I’ll use on inflation. We had the big spike higher, only four to reverse lower. Another classic example of buy the rumor, sell the fact. We slip back under the T-cross long. That area is now pivoting off there. We’ve come up to this critical level at 121212 but we must break through this area.
Euro/U.S. Dollar (EUR/USD)
We can see we’ve had an excellent signal here from the medium term crossing, the longterm predicted difference off this verified support. But, this is right now, telling us it’s been a corrective move higher, as we’re failing at that critical VantagePoint level. Now when we look at our long predicted, we managed to close above this area, so one 11190 is an area to watch. But we must break through the 121212 area in order for this thing to move.
U.S. Dollar/Swiss Franc (USD/CHF)
Right now we’re not showing a lot of momentum in the RSI. It’s slightly bullish, but again, we must break through that critical level, as identified by the VantagePoint software. Now when we look at US/Swiss Franc going into next week, we had a big push lower again off that, again, very confused Federal Reserve. Hit our T-cross long to the number at 10136. And it’s taken a significant bounce off that area. Now our critical level for this week, we want to look to hold above 10144, here guys. We’re looking for our indicators to turn back to the upside or predicted differences and in our neural index.
British Pound/U.S. Dollar (GBP/USD)
Right now it’s suggesting we have a little bit more downside. I would look for longs on this particular pair, probably more towards midday Tuesday, providing we hold above this critical VantagePoint T-cross long pivot, at 10144. Now as we move in towards our British Pound/US dollar, very, very big move up here in the Pound/Dollar.We caught this in live trading in the Vantage Point live training room, that I run on Monday and Wednesdays. Fantastic move off here.
But once again guys, the main trigger here was the medium term crossing, the longterm predicted difference with a rising RSI, and we’ve got that matched with the neural index. This off a verified support level that coming in, down at about the 12866 we were buying around 129. That led to about a 200 PIP move to the upside. Very nice move, but now we’re coming into very strong staggered resistance. The first one I would be very mindful of this week is 13195 this is going to be followed by 13268 and again, our major, major level is going to be 13378. But it’s going to take some pretty fantastic news out of the UK on Brexit to get it going up that high.
If anything after this big move up on Friday, I suspect that we’re likely going to get all tangled up between 13260 and 13194, so shorts carry a slight edge. But we’re going to wait until we get a signal from VantagePoint, our RSI turning down, our predicted differences turning down. That hasn’t happened yet, but when we look at our long predicted here, our main intraday pivot at 13052, I do suspect at some point over the next 24 to 48 hours after the market opens on Sunday night, that we will retest, at a very minimum retest this level.
U.S. Dollar/Japanese Yen (USD/JPY)
Now with Dollar/Yen going into next week, very, again, the power in the VantagePoint software is to provide us with direct inner market correlations, and of course intraday pivot areas, whether you’re a short, medium, or long term trader. So if we look at this right now, again, we’re getting all tangled up in the Dollar/Yen at 11165. We’ve repeatedly bounced into this Vantage Point pivot area and failed. However, we have very, very strong support down to the 11084 area. And essentially if we look at are our direct inner market correlations, for example, stronger equities, weaker gold, this does not benefit the Yen. So we could see a very good long trade opportunity.
We’re already getting an early warning sign from the medium term crossing the longterm predicted difference, but we’ve got to get some momentum building here. But again, as long as we’re holding above 11084, the biased, believe it or not, still maintains to the upside. Once again, when we look at our long predicted here, this is one of the classic strategies that I teach in the VantagePoint, live training room and to my own direct clients, we can see the market in constant contact with the predicted moving average. Selling into that area on a daily basis very, very profitable guys.
But if we can break above 11157 that will immediately take us back to the 11237 so that’s what we’re looking for here. But first and foremost, we have to hold the 11084 area.
The Commodities Currencies
U.S. Dollar/Canadian Dollar (USD/CAD)
Now as we move into our three main commodity currencies, starting with, of course us/Canada, this pair obviously driving traders crazy. We’re in a very identifiable range, guys. Don’t lose sight of that, okay? The top side of that is just above 134. There are immediate range support is coming in at 13376. With oil prices falling, the probability is we’re going to go higher.
And if we look at our oil contracts, again, we’ve got a sell signal on oil. If oil continues to move lower, that will push US/Canada higher, the direct inner market correlation. So once again watch your support levels. We’re going to be looking at our, our neural index is still pointing down. But if the area between 13376, and this additional area at 13274, this would right now in my respectful opinion be the buy zone. As long as gold is going lower and oil is going lower, guys, US/Canada is going higher.
Australian Dollar/U.S. Dollar (AUD/USD)
The same can be said here for Aussie/US and New Zealand/US. Aussie/US is likely going to come under more selling pressure this week. The fundamental event risk, we’ve got the RBA, I forget which day it is, I think it’s Tuesday night, so I don’t see any kind of hawkish rhetoric coming out of the Royal Bank of Australia. I’m not seeing that at all.
So the likelihood is we retrace a little bit towards the 7043, 7070 area and then we fail at that level. Classic case again of buy the rumor, sell the fact. They buy the Aussie going into the announcement and then they dump out of it the second they get the news. So be careful of this one but there’s been a very good corrective buy signal this last past week on this. But we just couldn’t clear the VantagePoint medium or long predicted. You can see that we’ve got a verified zone, has now shown itself inside of the VantagePoint predicted moving averages.
That level now coming in at 7068, so we would have to break free and clear to take the pressure off the downside. And I’m not seeing anything on the horizon that’s going to do that.
New Zealand Dollar/U.S. Dollar (NZD/USD)
Now, when we come to New Zealand for next week, it looks pretty much mirrors Aussie/US here guys that key pivot area 6680. New Zealand is the stronger of the two. What I’ve recommended with my own direct clients on this particular is instead of trading Aussie/US and New Zealand/US, we can always look to Aussie/New Zealand, short Aussie/New Zealand. There may be a very good play there.
So we’ll be looking at that one also. But right now, the three main commodity currencies, the CAD, the New Zealand and the Aussie are likely going to come under pressure if the commodities like oil and gold, keep moving lower, so will these currencies. So with that said, this is the Forex Weekly Outlook for the week of May the 6th, 2019.