Welcome to the Artificial Intelligence Outlook for Forex trading.
VIDEO TRANSCRIPT
U.S. Dollar Index
And now, again, the Fed is the concern, uh, because with that, the most recent labor report confirmed that the labor market is absolutely slowing, with only 12,000 jobs, uh, we’re still missing about a million jobs from the seasonal adjustment there where they reported the error. So again, on Friday, we’ve come down, hit our T cross long at 103.68. If we break through this particular area, which is more likely than not, then we would see a much deeper move, probably back into the 101.37 by year end.
Gold
Now, gold has not immediately benefited from that payroll number, but it likely will, and again, it always takes a day or two for the market to digest the payroll number because it’s complicated—the U3, the U6, uh, again, the average hourly earnings. It’s a very complex report, but in short, uh, the labor market is slowing, so that’s pointing towards a potential recession, which does favor gold. So right now, our T cross long, that’s coming in at 2715. Uh, the indicators are somewhat mixed here, but as you can see by the predicted RSI, we’re not breaking through that 40 level, so we don’t have the downward momentum here. This appears to be, uh, corrective in nature. Watch this area very closely at 2715 this coming week because again, this is an outlook, guys, not a recap of something that’s already happened. We’re forward-looking into next week with major support and resistance levels.
Now the monthly opening on this, again very important, 2743. We’ve closed at 2736, so gold is slight, very, very slightly negative on the month, but again, the T cross long should provide that additional support.
S&P 500 Index
Now looking at the S&P 500, obviously, they’re not responding well, uh, to this election, uh, I think a lot of market participants, uh, are basically hedging their bet, which I’ll talk about more in a minute with the VIX. But when we look at the S&P 500, our T cross long at 5785, so yes, the Fed is likely to cut a quarter basis point, but the equity markets may not, uh, respond the same way they have over the last several years. So again, we’ll monitor these particular levels, but my concern here is we have a considerable gap from where the market is now and the current calendar yearly opening price at 4745. In many years, regardless of how big a move I’ve seen in equities, I’ve also seen, uh, a significant sell-off getting close to the yearly opening price and then rebounding a little bit higher. So with the verified support low, the next low we have here is 5406. That is a considerable distance from where we currently are right now, so some volatility coming into the market.
Volatility Index ($VIX)
I, we can assess here, or I can assess, but I’ve been monitoring this VIX very, very closely, and in my respectful opinion, I think that they’re hedging their bet. They’re both long the equity markets and they’re long the VIX because not sure of the outcome of the election, what the Fed is doing, not doing, because every week he keeps flip-flopping based on the lagging data CPI, but the labor report was should send a pretty clear message to the Fed that he should be cutting, uh, as is the Bank of Canada, the ECB, the Bank of England globally, they’re cutting. So, uh, to get out in front of this, we’ll see what he does, but right now the VIX still needs to break through that verified resistance high at 21.49. Additional verified resistance that has formed this very dark, ominous cloud over the VIX from moving higher comes in at 22.74, so we’re going to need to break through both of these particular levels, and that is entirely possible looking at that S&P 500 chart.
Bitcoin
Now, Bitcoin, again, coming off of a very, very strong month, uh, not surprisingly, because again, I’ve talked about that VIX, or, or excuse me, that Bitcoin, uh, considerably over the last period of, I would say, arguably the last, uh, probably two months. Now, looking at Bitcoin here, we can see that Bitcoin is, uh, coming off of its, uh, it’s at a big push at the start of the week, 73,534. We’ve retraced back to our T cross long, the structural bias of Bitcoin remains solid. Now, November is not usually as strong as October, but it still looks good for a retracement higher, but again, the market waiting to see what happens with the Fed, the election, all of these different things, uh, so again, our T cross long, 69,912. On that, but again, when we’re looking at that current monthly opening price coming in at about the same, 69,912, we want to watch this area very closely, as our T cross long, excuse me, is a little bit lower than that, at 68,376. Now we do have a corrective sell signal on Bitcoin, but when we combine that with the predicted RSI, we can assess we don’t have downward momentum, so it’s telling me that basically this is just a simple corrective, uh, profit-taking ahead of some major event risk this coming week, and then we go higher again. If we look at Bitcoin, guys, since about 2014, when you’ve had one year in Bitcoin where it’s down 50% or more, it has rallied for the next three consecutive years. This again occurred back in 2018, same thing, so in 2022, I believe it was, we had the same thing, Bitcoin selling off 60-70%, but we have fully rebounded from that. Last year was the first year of that three-year cycle, being up 155% last year, and we’re up over 60 this year, so in my respectful opinion only, Bitcoin still, uh, has 2025 as a strong rally, and then in 2026, we likely get into potentially another down year. So right now, unless we have momentum breaking on the predicted RSI, longs are still, uh, heavily, heavily favored on the Bitcoin contracts.
Light Sweet Crude Oil
Now, light sweet crude oil, responding to some of the things in the Middle East, but as you can see, this is why it’s very important we stay away from these rolling performance models, guys, where we use a random 52 days, a random 30 days, random 60 days. This is the calendar year open, uh, it is indisputable that oil is bearish while below this particular level. When we’ve broken down below it, there’s been a significant, uh, a sell-off. Now, 71.78, very important, the T cross long at 70.02, but again, the indicators still are lacking momentum to the upside. So again, if there is a pending possible recession coming in the US, then that does not bode well for long oil longs, but either way, this time of year, I tend to lean towards Nat gas, uh, with the heating season, etc. But again, if we get above 71.78, we have to stay above that, uh, to remain long here, guys. And as you can see, the geopolitics, everything else has pushed it higher, but ultimately, it’s always gone lower.
Euro versus U.S. Dollar
Now, as we look at some of our main forex pairs going into next week, all eyes will be on the Euro. Now, very interesting that we’ve closed one day on Thursday above the T cross long and then we moved lower on Euro/US on that horrible payroll number. So this is very likely to be a fake price here, so our T cross long, 1.0868. If we can hold above this level next week, then longs are absolutely in play. I believe they’re in play either way in the year end because in most cases the dollar does not do well in its fiscal first quarter, which started on October 1st, while the rest of the markets in the fourth quarter, the US dollar is actually in its fiscal first quarter. Always remember that. It does usually does very poorly, uh, until mid to late January, early February. So if we can clear that, uh, then we—but as you can see right now with this pink line, we do have a medium-term crossover. If you click on, uh, F7 in the VantagePoint software, you can see a new crossover is formed after a very long downward move, so the probability that that crossover is right is very high. I suspect, uh, a downward move on Monday and then on Tuesday, Wednesday of next week, once we get past this election, the Euro is likely to move higher.
U.S. Dollar versus Swiss Franc
Now the US/Swiss franc, again, the Swiss franc being a risk-off, uh, currency, if those equity markets come under pressure, and the VIX is the one that breaks higher, you want to add shorts on this particular pair. Very significant resistance forming up here, that high now coming in at .87. I believe we can push a little bit higher towards this verified resistance high at .8749, and that’s where the sellers are likely to come in. The predicted differences, you can see, it looks just like the dollar index, uh, a little bit of a concern that reverse checkmark here that I’ve talked about in previous webinars, uh, hitting that 40 level and then you can see we’ve rebounded here on Friday, but again, uh, we must break through .8750, guys, if this pair has any chance of going higher, and at this time of year, that would be very unlikely.
British Pound versus U.S. Dollar
Now with the pound/dollar, again, we are holding above 1.2732, the calendar yearly opening price. Now as long as we’re holding above this level, there is a slight bias for longs here. Now the signal is starting to progress, there’s a checkmark here on the on the neural index strength, so while the neural index is red, it’s important to point out that inside the neural index, the angle is actually pointing up, suggesting that, look, something is going on here. So our TR cross long, 1.309, we need to get above that. Once we do, we should be able to target back into this 1.3430 area into year-end, but again, uh, we will see where we with the data and everything that’s coming out next week. It could be very positive for the dollar, or it could be very negative for the dollar, so we’re all waiting on pins and needles to see the outcome of the election, and in next week’s outlook, uh, I will briefly speak to it and see where we’re at. But again, hopefully, it’s not contested, and we move through this.
U.S. Dollar versus Japanese Yen
Now the dollar/yen, once again, I believe the carry trade is going to come under significant pressure in 2025, probably in the latter part of 2024, meaning mid-November into December, and then starting in January. So each time the Fed cuts, the interest rate differential between the Fed and the Bank of Japan is going to change, and slowly and slowly and slowly, they will get tighter on those spreads, and that will bring dollar/yen probably crashing back down into the 120 area next year sometime. So, uh, again, we’ve got very strong verified resistance at the high of 153.87. I do think the pair will remain firm until after the Fed and after the election, and then we’ll see where we’re going. But ultimately, I don’t believe the Fed can hide from this anymore. He’s going to have to make significant cuts, and again, it’s all about the interest rate differential, guys, and the carry trade. If the market believes what I’ve just said, then they will start, uh, slowly or rapidly exiting the carry trade, and when they do, uh, pairs like US/Swiss franc go lower, but dollar/yen will be dramatically affected by this.
Australian Dollar versus U.S. Dollar
Now, as we look at some of the additional Asian-backed currencies, like the Aussie/US and the New Zealand/US, I believe there will be very good opportunity on these two currencies in 2025 and in 2026. So right now, we have a verified support low that’s coming in at .6537. Watch this area very closely next week, but as you can see, the predicted differences, measuring the strength of the short, medium, and long-term trend, they’re running sideways. The neural index, uh, went off yellow there in the strength, and then it, it’s pointing back down, so what I often see on Monday after the nonfarm payroll is the price continues until about 10:00 a.m. Eastern Standard Time, and then all of a sudden, it starts to flip. The market has to digest that labor report and all the components within that report. So again, we’ll watch it very closely, but there is a heavy bias against the US dollar, and these pairs are places of value.
New Zealand Dollar versus U.S. Dollar
If we look at the Kiwi, we’ve got the same thing here. If I just take this and visually draw a line right there at .5935, we would need to break down below that, but either way, longs are heavily favored if we can get down to .5851, but I will respectfully submit that is unlikely at this time but still possible. So we have a very, very choppy week ahead of us here, but with that will come opportunity. So, with that said, this is the VantagePoint AI Market Outlook for the week of November the 4th, 2024.
