Stock Market

Vantagepoint AI Market Outlook for September 27, 2021

Welcome to the Artificial Intelligence Outlook for Forex trading.

VIDEO TRANSCRIPT

Hello everyone and welcome back. My name is Greg Firman, and this is the VantagePoint AI Market Outlook for the week of September the 27th, 2021.

U.S. Dollar Index

U.S. Dollar Index

Now, to get started this week, we’re going to begin where we always do with that very important U.S. Dollar Index. Now, we are going to do a quick review here from last week’s weekly outlook. Now, what I had stated is that the dollar would likely hold its gains until Thursday, and then either way the dollar sells off. Now, again, this is a weekly outlook, not a recap, but it is a weekly outlook, not a two-week or three-week or a one-month outlook, strictly for one week, the next week’s outlook. So again, the market basically was buying dollars right up until the Thursday. Technically, the Fed was somewhat hawkish, but he really didn’t give us much of anything. So the dollar again sells off immediately after that Fed.

But the key thing we want to look at is doing complete analysis. When we look at this, we can see that on the 20th of the month, over the last three months, or the last two months, including this month, excuse me, is that on the 20th of the month, the dollar comes under selling pressure. Now, what I’ve often talked about is dollar cycles and that the dollar is usually strong in the first week of the new month with the nonfarm payroll number. Now, in each one of these sell-offs, we had about 10 or 11 days where the dollar moved lower. So I would still anticipate some dollar weakness. Now, what we also want to make sure we understand is we had a very clear signal from VantagePoint that this is not the time to buy dollars. The medium term crossing the long term predicted difference to the downside, warning us that if nothing else, we’re likely going to retrace to this T-cross long. And again, that’s exactly what has played out.

Now, you’ll see this rhythm in the market. When we work in complete analysis, looking at repetitive patterns in the market, not counting waves, ABCDs, 123, we don’t want to track impulse buying and selling. We want to track institutional funds when they’re pulling their money out. By using the correlation of 31 other markets, we can see that. So again, when we look at the seasonality going forward with the dollar, if we look at this going back from one year ago, we can see that the dollar has basically given up the majority of its gains and it had capped out at or about the first week of November.

Now, again, this is doing complete analysis when we bring in fundamentals. The fundamentals here is that a lot of corporations move dollars offshore to avoid taxes. And this year is likely not going to be any different, as the current administration talks about a minimum tax rate, I think around 28%. You’ve also got a very significant infrastructure bill that’s about to be passed here, another $3.5 trillion. And I think there’s another one lingering of another trillion dollars. So again, the more money you’re printing here, guys, the more the currency tends to devalue. That’s what we’ve seen with the dollar and a number of other major currencies over the last 20, 30 years, the problems with fiat currencies. An excellent article in the VantagePoint blog about fiat currencies. I would encourage everybody to go and read that so you better understand how these currencies really work.

Now, when we look at it going back two years from a seasonality standpoint, we can see we had basically the same thing. The dollar, it had basically peaked at the beginning of October. When we go back three years, this is how very quickly we can check seasonalities, now three years ago the dollar didn’t do too bad. So then if we look at four years, we’re back to the same thing, peaking in November. So if we look at the last four years from an exponential standpoint, you can see that there’s a 75% chance that the all gains on the dollar are capped by probably the 5th of November.

Now, we should still have a dollar strength at the beginning of October, and we would still likely have some dollar strength at the beginning of November. But then as that money moves offshore, then the dollar starts to run into problems. So again, if we take this back a year, as I said in last week’s weekly outlook, before we get too worried about these additional resistance up at 94.30, and even at the level that I discussed in last week’s weekly outlook that we didn’t break above, we are still within the overall range. We have to take out these levels first.

So again, as we start to back these charts out, we can see more of a picture with the dollar here. We can see the additional resistance at, again, 94.30. We have significant resistance again, all the way up here again to the highs of 94.63. But this is basically more or less a pipe dream up here in this calendar year. In most cases, the dollar is at its strongest in the first quarter, not the fourth. So again, we have to do a complete analysis of this and look at the overall structure of any current market we’re trading. So then when we look at the past three months, we see again on the 20th the dollar sells off again. But we’re not in a reversal here.

Now, to be clear, the indicators we’re using this week, we’re still looking at that 37-week lookback. We’re keeping it within the calendar year, so we’re not going too far outside the box. We’re using the predicted short, medium, and long-term difference, the Neural Index, the Triple Cross. And, of course, the very important verified zones, which warn us that we have significant resistance up here. So again, it will take a significant catalyst to push the Dollar Index through the 94 level. But before we even worry about anything above that level, we still have to clear 93.43 and more importantly, get above 93.72 and stay above 93.72. Now, if we get that and we have a true breakout above 93.72 and we can close above that level for say two or three days in a row and we can make a significant move past that, then resistance will be turned support. We are not even remotely close to that yet, guys.

We go week by week here and we look at the indicators. The indicators currently right now with the MA diff cross, it’s conflicted. So again, when we click on our medium-term crossover, what we’re looking for is confirmation that this medium-term crossover is still good. There’s a warning sign here with the MA diff cross that it’s not good. And again, in last week’s weekly outlook, I was able to call the exact day the dollar would give up its gains, which is on Thursday. This is fact, not fiction. Again, when we look at those correlations, we look at seasonalities, and we look very specifically at repetitive patterns in a particular cycle, this is what we come up with. So again, we know the exact levels where the breakout point is in the dollar and we need to watch that level very, very closely.

S&P 500 Index

Now, as the dollar backs off, the S&P 500, once again as I had stated in last week’s weekly outlook, the S&P is likely to return higher once we get past the event risk of the Fed. So as the dollar starts to soften a bit, the equities immediately recover and back up they go again. So the S&P 500, when we look at their 37- week lookback here, we can see that our high is coming in at or about the 45.45. We appear to be on our way back to that level. Now, again, the MA diff cross warns us that, look, we’ve got a little bit of a problem here. And this big move down is again very much like what I said in last week’s weekly outlook, that the market buys the rumor, but then they sell the fact. Did the Fed give us really anything on Wednesday? Just a lot of what ifs, a lot of question marks, no real commitment to anything. So the market now, we’re now in a holding pattern waiting for the Fed minutes to see what they say to see if we can get some kind of confirmation.

S&P 500 Index

But our predicted differences are rising. Our Neural Index is rock solid here, as we can see, and the market is starting to rise. Now, for next week, we want to make sure that we’re holding above the T-cross long at 44.45. If we click on our F8 and we use our blue line, our predicted moving average by itself, we can see that we are closing above that blue line two days in a row. That usually signals that there’s going to be a bigger move to the upside here. So again, we are near our yearly tops, but those yearly tops were put in place just a matter of weeks ago. So this looks to be corrective in nature. The support zone that we talked about last week at 42.33, I didn’t anticipate we would get down. But this is a classic false break or a classic bear trap along this support line coming in at 43.69.

We were actually doing this in the VantagePoint live trading, training room, excuse me, this past week, along with what I discussed with the Dollar Index, those repetitive patterns, how important it is to work in seasonality. Seasonalities represent institutional money here, guys. These are the things that we look for. So for now, it would appear imminent that we are going to try and move back towards the high, which is 45.45. If money continues to come out of the dollar going into November, then that is likely going to push the S&P 500 even higher than the yearly top. So we’ll be watching very closely for that.

Gold

Now, with the gold trade here, we’ve got good, strong support here being tested again. This is down at the low of 1,744. If we are unable to hold 1,744, then, again, we would start to look at targeting back down into the 1,693 mark. Now, again, this does point still to some dollar strength, but my view is that Bitcoin is the one that’s really giving gold a hard time, which I’ll discuss in a minute here. But again, when we look at gold, it still remains bearish on the year. That’s an indisputable fact if we look at our yearly opening price up towards that 1,900 mark. But again, I do anticipate that gold, we would see some gains in gold as we move into early November because that’s the seasonal pattern. As money pours out of the dollar, it tends to go into gold.

So for next week, we’ll be watching the T-cross long very closely at 1,773. And again, to get closer to price action, we use the long-term crossover without the black line, just the blue line by itself, and that gives us a very, that gives us a hot zone. Okay? So if we look at this, that long predicted is 1,754. Here’s another way you can use the software. I often straddle the blue line, or I’ll put a buy limit order just above that level at about 1,760. And if we clear this blue line, then the market is likely to take a pop to the upside. So again, there’s many different ways that this can be done, but for now the indicators in VantagePoint remain firmly bearish on gold.

Gold

So I would be reluctant to set up buy orders around that area until we see if we actually do have some dollar buying, if the dollar can clear those major resistance levels that I’ve discussed here. And again, this is a weekly outlook, not a monthly outlook, a down the road each week in my respectful opinion. This is why I use the weekly opening price as an indicator, so to speak, because on that particular week I want to see if the market can hold above its opening price. That’s very similar to using a yearly opening price. So right now, gold has struggled. But gold has been up for the majority of the week until the Fed on Thursday and then it got pummeled lower. But it’s still holding along that support line. So 1,744, if you’re an aggressive gold trader, then you would simply put a sell limit order below approximately the 1,744 area and wait for a breakout play. That is a strong possibility.

Bitcoin

Now, as we look at Bitcoin, once again here my view is that China doesn’t matter. China, now they’re saying that China’s banned cryptocurrency trading. Just a side note here, guys, that a number of VPNs, NordVPN, Surfshark, the Chinese people have these VPNs the same as we do. Inside those VPN, there’s a server called shadowsocks. That bypasses the great wall, firewall of China. So the fact that China is banning something, who cares? Let them do whatever they want. The last person we ever want to take advice or listen to is China in this regard.

Bitcoin

The Chinese people are going to continue trading Bitcoin. They will find a way. And either way, corporations are moving significant amounts of money to hedge against inflation risk, not with U.S. dollars, with Bitcoin. So for now, we still remain. The event risk, or not the event risk, but the risk of China will dissipate. The market will, like most other things, will start to ignore them. This is a Communist country, guys, so I’m not going to base my trading decision because of a statement from a Communist country. That’s just not going to happen. I’m looking at U.S. corporations that are moving into Bitcoin in very, very large amounts.

So right now, we have good support at the low of 39,716. It’s going to remain volatile until the market gets past the China comments again. But remember, China also wants their own digital currency. They want Bitcoin to go away. They can’t manipulate Bitcoin the way they can manipulate many other things, including their media. So once again, just remember that, that there is still significant investment in Bitcoin. Our VantagePoint key levels for next week, they’re coming in at the T-cross long, which will come in at 44,535. And again, when we click on our F8, this is an excellent pivot level to use. If we can get back up above our long predicted at 44,134, then that would trigger money coming back into Bitcoin. I would watch for that, maybe next week, maybe not, but if not, definitely by year end, that the market will disregard the particular comments from China.

Crude Oil

Now, as we look at light, sweet crude oil, light, sweet crude oil getting a boost from OPEC still. It’s recovering from that OPEC. We’ve had a good retracement down to the T-cross long here. But again, we’re getting into very, very heavy resistance. Now, there’s a growing debate on the seasonality on oil, where you’ve got one camp that says that oil is very strong in October, November, December, then you have another camp that is saying something completely different, that this has already worked in. I would be leaning towards that particular camp, saying that this is, we’re running out of steam here.

Crude Oil

So the benefit of using our yearly highs and yearly lows and our opening price, it gives us a zone. So our 37-week high is 76.02. That would represent a reasonable selling opportunity. Now, if we look at our VantagePoint software, it’s already warning us that there is something off with this particular trend. Now, the medium term crossing the long term predicted difference is warning that there is not a lot of strength up here. If we look at the coloring of the verified zones, you can see how it goes to light pink, little darker pink, and then there’s a big, glowing red here saying, ooh, be careful up here, right?

So that’s the benefit of those zones is to give us that warning that it’s not just a free ride here. There’s no free lunch. So I would be very, very cautious with longs up here, whether that be in light, sweet crude oil, energy stocks. I would be extremely cautious as we go into year end because, again, some of the arguments around this can be made that oil actually doesn’t do that great. And you can see, once again, November the second here, guys. So if we’re looking at the intermarket correlation between, inverse correlation between oil and the dollar, and I would argue that that’s not as strong as what it’s been because both oil and the dollar are having a good year, but either way the dollar usually takes a hit around the beginning of November. That’s a fundamental that a large number of indicators don’t pick up on, but the VantagePoint indicators have accurately forecasted that for many, many years. That’s where I originally noticed. Not by studying seasonalities, solely seasonalities, but by also studying the reversal points using the MA diff cross.

So with that particular low, right there you can see that oil did rally significantly at the beginning of November last year. And that was largely due to that U.S. dollar sell-off. We can see something very similar here too. And you can also, this is consistent with the dollar strength, you can see that oil gets pounded lower at the beginning of the year. That’s because the offshore money that are selling dollars and moving money offshore in November, they’re bringing all that money back between January and March. This is a vital piece of information that most market participants are unaware of. Okay? So we would continue to monitor this, but again we will see where we go from here. But very cautious on longs up at this particular level. And when I back this out over a two-year period, you can really see the yearly range on oil. And we are definitely getting very toppy here.

Euro versus U.S. Dollar

Now, I’m going to run through a few currencies this week. I don’t think I’ll do all of them. We’ll just hit the main ones. When we look at the Euro/U.S. pair, once again, as per last week’s weekly outlook, it was very unlikely that the Euro is going to break through the 1.1660. Now, there is a German election this weekend, the Euro’s going to be volatile. But if gold breaks down below 1,740 and starts plummeting, that will be the trigger you’re looking for for Euro/U.S. shorts. If gold holds its ground, then the Euro is likely to do the same. The intermarket correlation is a driving factor with this particular pair. So when we look at this, we can see that once again that ominous signal from that MA diff cross is not in agreement with the main crossover.

So when we click on again, we’ll just quickly click on our F7 here. When we click on our F7, we can see that we have our medium-term crossover back here, an excellent signal from VantagePoint. But now, these two signals are very conflicted, and the pink line measures the strength of that medium-term crossover. And it’s warning that, look, this trend to the downside is getting a little soft here. So we would be looking for a retracement back up. The level we want to watch on the Euro is, again, the long predicted, that predicted moving average at 1.1732.

Euro versus U.S. Dollar

So again, one of the ways you can play this, guys, is you can decide whichever way you want to trade it and say, okay, well, I believe EURO/U.S. is going to go long. So then you would put, you can straddle this predicted moving average by putting a buy at say 1.1750. Once it clears 1.1732, it should be ready for takeoff. Or the alternative is, since we have closed the week at 1.1721, you can simply put a sell order in at about 1.1730.

For Monday’s trading, we can see that the predicted high for the day is 1.1741. In my respectful opinion, we may not hit 1.1741 because in order to do that we would have to clear the long predicted at 1.1732. That’s an excellent way to implement the predicted moving average with the predicted high and low of the day. When you can get both of them at or around the same level, then you’ve got a very educated way of looking at these markets right now. However, you can see the Neural Index is green. The MA diff cross is warning. So there’s a slight biased here actually to the upside. So if everything goes well with the German election, you’ll probably get some kind of relief rally with the Euro. We will likely move higher.

British Pound versus U.S. Dollar

Now, the pound may not be the same deal here. Now, the pound, the Bank of England was a little bit better there. But slower growth, you’ve got some inflation there. Maybe not the best cocktail mix for the pound. This is where we’ll have to see. But for now, we have the MA diff cross with the Neural Index, and we have heavy support down at the low coming in at about the 1.36 level. The yearly opening price on the pound it’s coming in about 1.3644. So we would watch this one very, very closely here to see if we can hold along these support lows. The pound is still in relatively decent shape as long as we can stay above 1.3572.

British Pound versus U.S. Dollar

Once again, if we look at the seasonality and bringing that seasonality into this, you can see that the pound had one heck of a rally last year at this time. So that seasonality is not something we should disregard. You can see there was also a significant rally on the pound two years before that. If we go back four years, you can see that that started at the end of, again the end of October, pointing towards that dollar weakness. Three years ago. So once again, we’re sitting at about a 75% probability on a seasonality basis that the pound moves higher in the next 30 days.

So again, these are the things we want to look for and then combine it with our VantagePoint indicators. But right now, VantagePoint is mildly bullish. But again, we are not closing above that blue line. We need to close above that two days in a row, and we couldn’t get that on Friday. So again, we’re going to watch that long-predicted 1.3696. Again, the perfect opportunity for another straddle here. You can buy up to that particular level, or you can put a buy limit order above, just slightly above 1.37, or just sell into one 1.37, whichever one you would prefer. But right now, VantagePoint is warning that it may not be the best time on shorts just yet. So we’ll continue to monitor this. But the key thing is if you know your levels, then it makes it far easier. You don’t have to chase price. You can actually wait for it to come to you. That is the whole benefit of using the VantagePoint software.

U.S. Dollar versus Japanese Yen

Now, as we look at the Dollar/Yen, the Dollar/Yen advancing on the Fed. But once again, we’re going to be coming into some very stiff resistance up here. We’ve got the resistance high, that that’s coming in at 110.80 and even stronger resistance that is going to come in at or about, I believe, just under the 112 area. That’s coming in at 111.66. Now, be careful of exotic barrier options. What I mean by that is that you have options plays that are protecting round numbers, like 111, like 112. So if we have a push above 110.80, be cautious with that because it could go up above it by 30 PIPs, only to turnaround and crash lower by 120 PIPs because they’ve knocked the option off. Once they hit the option, the buyers all of a sudden dissipate and they’re gone.

U.S. Dollar versus Japanese Yen

Now, I’m not saying that’s what’s going to happen because right now the VP indicators are looking pretty strong actually. The MA diff cross was spot on. Again, you can see that that told us our reversal with the Neural Index. The MA diff with the Neural Index warned us that this was going to happen before the Fed made its comments. And the Dollar/Yen is holding its gains as the equity markets recover. So if you’re trading this, as long as gold is going lower, then the yen is weak. That’s the main thing you want to look for. Watch the correlation to the yen and the Japanese currency, or, excuse me, gold and the Japanese currency. Very, very important there.

But the yen is also inversely correlated to equity. So if the S&P is going higher, then that’s hurting the Japanese yen, which is pushing the Dollar/Yen up. So again, there’s a lot to look at here, but if you break it down into simple terms and minimize your indicators and multiple different trading strategies and focus on quality, not quantity, know your levels, right now we continue to run in this longer channel here. For three months, we’ve been running in this channel between 111.66 and the lower end of that, about 108.72. Very little has changed here, guys, right?

And we are anticipating dollar weakness come November. So if we go back, look at the seasonality on this, you can see it, that the Dollar/Yen had capped by October the eighth. Right? If we come back two years on this, we see something very similar, but a little bit more buying in there. If we come back three years to check this seasonality, there it is again, big sell-offs around again, October the eighth. We go back four years, keeping it… I don’t want to go back on my seasonality too far here because, again, I want to make sure, but everything here points towards dollar weakness between October 1 and November 3. That’s what we’re seeing in the charts. And again, I am a strong, strong proponent of seasonality because it represents institutional funds, not impulse buying and selling. I have no interest in what those people are doing. I want to see where the institutions are parking their money. That is vital to me. So again, when we look at that, it’s going to be tricky, but we know our levels.

U.S. Dollar versus Canadian Dollar

Now, on the final pair I’m going to look at this week is going to be the US/Canadian Dollar. It’s very highly correlated, inversely correlated to Aussie and New Zealand. But keeping it to the main pairs in the Forex Market, the Canadian dollar is rallying on oil prices and equities. The Canadian dollar highly, highly correlated to light, sweet crude oil, as is the British pound, and equities. So right now, US/Canada is trying to put out a fresh sell signal. The election is over in Canada. Nothing has changed. We have the exact same government, minority government that we had prior to the election. So we just took $610 million in Canada, flushed it down the toilet, now we’re going to print $610 million more to keep going. So I don’t know if that’s going to be a good thing or a bad thing for the Canadian dollar. But just remember, the Bank of Canada is still talking about raising rates in 2022, excuse me, which I believe will be ahead of the Federal Reserve.

U.S. Dollar versus Canadian Dollar

So if we look at our main levels right now with VantagePoint, we are closing two days in a row below the T-cross long at 1.2682. That is usually a warning sign that this is getting ready to make a bigger move. Now, I could also turn and argue that you have a support that is forming here right off this particular low from Friday at 1.2635. I believe we need to breakdown below 1.2635 and more specifically, we really need to get down below these support levels and break free of this particular channel that we’re in.

So that low-end side here coming in at about 1.2484, once again just very quickly checking our seasonalities, what did Canada do? What did this pair do last year at this time? It had a significant downward move. This is all related to dollar weakness with money moving offshore to avoid paying taxes. If we look at it in two years back, we see the same thing. It’s mainly gone down. If we look at it going back three years, well, it’s not the same. It’s not a perfect system here. What about four years? If we take a four-year move here, well, the four-year move supports again what I’m saying that we’re simply hitting a top by November.

So once again, it’s very important that you’re doing complete analysis in your trade, working in intermarket correlations, working in key support and resistance levels, and, of course, adding seasonalities and critical levels. But we don’t want to go too far out in our analysis because things are changing rapidly in the markets. And again, if you’ll notice with the big banks, when they make forecasts on currencies, they’re constantly revising them because they got it wrong. They’re advising out one month, out two weeks, out three months. And when you go back and look at their original reports, they’re all completely off. And it’s not because of them or there was bad analysis, it’s because the market changed.

So always keep it fresh. Make sure you’re looking at where you are in the current trading year and what your key levels are. So with that said, this is the VantagePoint AI Market Outlook for the week of September the 27th, 2021.

Leave a Reply

Your email address will not be published. Required fields are marked *

ninety five  ⁄    =  nineteen