Welcome to the Artificial Intelligence Outlook for Forex trading.
VIDEO TRANSCRIPT
U.S. Dollar Index
So, again, we shall see where we move from here. The indicators in Vantage Point are still remaining firm on the dollar. So, once again, we will have more of the FED next week. We’ve got the CPI coming out next week, and again, I think that’s going to favor additional rate cuts going into December and into next year. And ultimately, that should weigh on the dollar.
S&P 500 Index
Now, when we look at how this has affected the equity markets, and this is a good intermarket example, that the dollar and the equity markets very seldomly go up together; it’s very often short-lived. So, the stock market continues to rally after the election, but the dollar didn’t. So, we would use that as a potential tell to say, ‘Okay, wait a minute, one of these is really strong, and the other one isn’t.’ And we all know, of course, that interest rate cuts usually fuel an equity market rally. It can also fuel a rally in a number of other markets. But for now, we want to monitor the direct market correlation. And in most cases, again, the S&P 500 has an inverse correlation to the Dollar Index. And again, pointing out the fact that we’ve made gains here, but not on the dollar after that election.
Volatility Index ($VIX)
So, we would absolutely in this scenario want to look at the VIX and see if we’ve got any movement. And as you can see, we have significant movement. This channel we’ve been running in, we’re moving down to the bottom end of that. The current yearly opening price at 15.01 on the VIX. If we break down below this, it will confirm dollar weakness but it will also confirm additional equity strength in the year-end.
So, again, a significant break on this. Our T-cross long on that is now coming in at 18.46, but as I said in last week’s Outlook, I expected a big move in either the VIXs or the global equity markets as they again, I believe that they were hedging their bets, meaning buying both equity markets and buying the VIXs at the same time because they both don’t go up together, but they’ve been both holding firm for a fairly significant period leading up to this election. So, I do anticipate a breakdown of 15.01, but if we don’t get it, and again very important why we would never want to look at a rolling performance model, this blue line is the current calendar yearly opening price from January 1st, 2024. You can see that it has constantly been in play, the bulk of this calendar year. If I look back over a 9-month period, you can see it running all along this area, taking a big spike up, and its natural retracement point is back to that calendar yearly opening. If we start monkeying around with rolling performance using a random 5 days, a random 30 days, or 60 days, it distorts what the actual trend is.
So for now, the VIX still remains firm, but I anticipate if it’s going to break down, it will probably be by the end of this month. Now, when we look at Bitcoin, once again a powerful rally on bitcoin that started back in October that we’ve done live in this particular in the live Vantage Point live training room, and I’ve done in this, once again in the AI weekly Outlook.
Bitcoin
I’ve strongly advised everybody that based on what I’ve seen in the Vantage Point software, over the since 2018 anyway, there is something going on in the month of October and most of November with Bitcoin. It’s a very, very strong seasonal pattern. We can assess here that, again, using that lone T-cross long, that predicted moving average, we have multiple, multiple retracement points to get back long on this as early as just last week again. So, when I’m looking at the close of Bitcoin on the week, 77,000, what are we looking at for a close here, excuse me, 76,531. Excuse me, we’ve hit a high though on Friday of was 77,4. And again, when we first started talking about this, it was back in September, warning everybody that this pattern is, you can almost set your watch by it. And we’re in a every time Bitcoin has had a year where it’s down 50% or more, the next three years have been a very strong rally, as I mentioned last week, reinforcing that point. So again, we’re into last year we were up 155%, we’re already up 60-70% this year. We’re in the second year of a three-year cycle. So likely Bitcoin strong again till the end of next year at this time. Then maybe we can look at shorts, but even then, I would argue that Bitcoin is a very, very strong future ahead of itself here for now.
Light Sweet Crude Oil
Now, looking at that light sweet crude oil, again oil getting a bit of a bump, but once again guys, here the calendar yearly opening price, that’s coming in at 71.78. We have to get above this if we’re going to be buyers of oil because, again, if the economy really is getting a little softer, then that doesn’t bode well for oil prices. So, we’re struggling with that yearly opening price, but we’re also running right along the T-cross long. So, in my respectful opinion only, there’s enough meat on the bone here for everyone, guys. Your sellers are at 71.78, and your buyers are down here at our T-cross long, coming in at or about that 70.66 area. So, we need a clean break of one of these two areas. For now, you play the hand you’re dealt, guys. That’s what we’re looking at. So if we can get above 71.78, and again I will briefly mention and point this out, stay away from moving your rolling performance model. It will again cause problems and distortion in price, make something look like it’s bullish when it’s bearish, make it look bearish when it’s bullish. So just a piece of advice, but for now, we do have, that’s what we’re dealing with oil.
Gold
And again, we can’t reinvent the wheel here, guys. We need to get a break of this area, and a lot of people looking to get long oil, but I think Gold‘s the better play personally right now. Gold is taking a bit of a breather after the election here. The positive sentiment, but Gold predominantly does very well in the month of December and early January. So, I suspect that they’re going to try and run some stops to get everybody out of longs when real institutional money will be looking to get long on this. I believe based on the labor reports, the possibility of a recession is still maybe there. So if that’s the case, that would fuel gold. So, we’ll see how things play out here, but I don’t think gold is done just yet. The indicators are bearish, we are likely to see more downside, but I also believe that it’s just a matter of time before buyers come back in. So, I’ll be watching my MA diff cross down here. The pink line crossing back up over that blue line is a contrarian, a very powerful contrarian tool in the Vantage Point software. So if I can get that pink line moving back up over that blue line, that will be my signal to say, ‘Look, okay, the buyers are getting ready to come back in here.’ So, right now, we’ve got a verified support low, that’s at about 2600. I believe that that may be the area we’ll be looking for. So, I will continue to update everybody on a weekly basis, but I believe 2600 potentially is in the cards, but I also think buyers will be monitoring that particular area.
Euro versus U.S. Dollar
Now, as we move into some of our main FX pairs here, assuming Gold will rebound in the month of December, then we would likely see the Euro do the same thing. So right now, we do have another crossover to the downside, but remember, there’s your election bar, guys. That election bar on any market you’re trading, keep a very close eye on the lows and highs of that bar because I believe that there could be a false break here. But the low of that bar is coming in at 1.0683. Friday is a down day usually on the Euro anyway, but the Euro often follows Gold contract tracks. That’s your in-market correlation here, positive correlation. So if Gold, if and when Gold does rebound toward the end of the month, the Euro is likely to follow. So a little bit more downside, but be careful of a bear trap down here, okay? Because again, once we’re now we’re done with the election, they’ve priced in the dollar strength, they’ve priced in a lot of things here, guys. So I’m not saying the Euro can’t go lower. I’m saying we would need a sustained break of 1.0683 before we started getting aggressively short on this particular pair. So again, watch that MA diff cross, the pink line back up over the blue line for that contrarian long signal.
U.S. Dollar versus Swiss Franc
Now, US Swiss Franc once again is basically very similar to a Dollar Index trade. It’s got a big of a push, but once again, no follow-through from the high at .8774. That’s what we’ll officially call now the election bar. So going into next week, guys, even in your software, you can do something just like this. Put a line here, go back up here in your software, put a line right there, and you can see it clear as day. So that bar in any market you’re trading, if we get a clean break to the upside, you can look at longs, but if and when we get a clean break of the lower end of that, I believe shorts ultimately is the play, either way, on this pair. Despite who’s been in power, everything, good data, bad data, multiple elections, the dollar has lost a significant amount, a significant ground against the Swiss Franc, and a real flight to safety. That’s likely what you’re looking at. So again, keep an eye on these two. It is moderately bullish at this time, but we would really need to make a clean push above .8777 to get this thing going.
British Pound versus U.S. Dollar
Now, the Pound Dollar, guys, I’m going to do it again. We’re going to look at that election bar and say, ‘Okay, the high is 1.384, or the low is 1.2835. I need a break of this area, and until I get it, I can play both sides of this particular bar. We’re above our yearly opening price. This pair is different than the Euro-US. It is still positive on the year, where the Euro is not. The Euro has never been positive on the year for any significant length of time, but the Pound has. So again, we’ll monitor this one very closely, but the indicators on this one are moderately bearish, but the neural index, the neural index strength, we’ve got a yellow, which is cautionary. And again, it’s trying to find its way here, but I believe it’s going to take a few more days, maybe a week and a half, before we really get a feel whether that dollar is going to hold its gains. And the data next week, with the CPI data that I believe the FED speaks again next week, these will all factor in, to what we’re doing because let’s face it, there’s going to be some volatility here because I believe that Trump has also said Powell’s history, but I also don’t believe he has the power to fire him. So, I’m Canadian, not US. I’ll see where this thing goes, but for now, I don’t think Powell is going anywhere. So if that’s the case, then I believe they will stay on this rate cut path, and if that’s the case, the Pound should rebound.
U.S. Dollar versus Japanese Yen
Now, with the Dollar Yen, a lot of traders watching this one closely. We’ve got another rate cut, excuse me, and this is by definition the carry trade. High interest rates in the US, low interest rates in Japan, that’s the carry. So they buy the dollar, they sell the yen, but I believe that this is going to start to come unwound here. So, longs are very, very dangerous up here on this pair, in my respectful opinion only. The neural index is picking up on that weakness. We’ve got our predicted differences pointing down. The predicted RSI is saying we have no downward momentum at this time, but as you can see, a break of our T-cross long, 150.182. Now, here’s an easy play, guys, because we’re using a lone predicted moving average, which is the T-cross long. And I did get a question about this. I’m happy to show that to you guys. I’ve simply unchecked the short and medium and left the T-cross long, the longer-term predicted moving average. That is my line in the sand. That is, it can be a very good money maker, guys. You can see that even though I don’t agree with longs, this level is saying, ‘Look, there’s still buyers.’ So the way I would consider playing this with the T-cross long identified at 150.12, I can set up sell limit orders at, say, 150.16. So when it breaks down below the VPT cross long, I’m simply allowing the market to come to me instead of chasing things. And yes, I have the predicted high and predicted low, but that’s for one day, guys. The T-cross long, as you can see, is for a lot more than one day, and it really is a line in the sand to help you gauge where to get in and out of these trades, and when you can actually sell low and when you can actually buy high, and when not to do that. So these indicators in VP are telling me that this pair is about to break down very soon, and as long as we keep getting those rate cuts from the Fed, there’s a higher probability we go lower, ultimately than higher, into next year.
U.S. Dollar versus Canadian Dollar
Now, the US Canadian pair for next week, once again a good example of using that T-cross long to simplify our trading but also using accurate anchor points and moving away from a rolling performance model. The monthly opening price here comes in at 1.3934, okay? And you can see that we come up and we hit that level, and mysteriously, there are sellers sitting there. We can also further assess there that, again, there’s enough meat on the bone for everybody here. The market is coming down, hitting the T-cross long four days in a row, okay? And it goes higher. So, in this particular scenario, we can sell the top and buy the bottom. And if you’re in the camp that ultimately the dollar is going lower into year-end and then into the first part of next year, then again, you can set those limit orders to sell below the TR cross long at 1.3853. Easy peasy, right? So, it gives us that level and that line in the sand as to which way we want to go with this. But this is, again, if I put a random 30 days on this, guys, these levels, this level of the current monthly and weekly opening price, would not be there because I’ve changed the anchor point. A rolling performance model again is, it can be very problematic for new traders and old traders alike. We need to know exactly. So we’re holding below the monthly opening price on this particular pair. That’s telling me that there are no buyers at that area. They’re all selling, and if I break down below the Tross long, then I’ve got a much bigger short, which I believe this pair will be a good short in 2025. I think it’ll be a very good short with the changing environment in, not just in the US, but there’s a change coming in Canada, an election coming there too, and I think we all know the outcome of that one. So, things, the winds of change are in motion, in short, guys.
Australian Dollar versus U.S. Dollar
Now, the Aussie is a Canadian is a US Canadian trade. It’s inverse to it. So US Canada goes down, Aussie US goes higher. Once again, when we look at this election bar here, this is from Wednesday. We can see that they’re really pressuring the top of this, and that is, we do have some level of follow-through above this high at .6645. So, with respect, I would say that .6645 is a level. Once we stay above that, I think we’ve got a long trade here, guys. So, our T-cross long, that’s coming in at .6641, which helps again with that line in the sand to confirm where exactly it is we want to buy and sell this. Now, the Aussie, the election bar low on this one is .6513. I have no interest in selling this unless I have a sustained break of that bar. And this is a trick I can give you guys for next week because, again, this is not a recap of something that’s already taken place.
New Zealand Dollar versus U.S. Dollar
Now, the New Zealand US pair, once again, it’s pressuring this T-cross long. So, whether you’re a buyer or whether you’re a seller here, guys, there is, there’s enough, again, meat on the bone for all of us. That’s the beauty of the FX market. So right now, you can see, every time they get close to the VP predicted moving average or the TR cross long, we’ve had a significant failure. But again, your election bar low, which is coming in at .5912, we have not seen any follow-through on that. So again, I’m a happy seller of Aussie US and New Zealand US, but it must be on my terms or on our terms, and that is, again, we’ve got to be very, very, very cautious selling this pair and make sure we’re taking profit because I believe there could be a bear trap setting up on this one also.
