Welcome to the Artificial Intelligence Outlook for Forex trading.
VIDEO TRANSCRIPT
U.S. Dollar Index
Now, to get started this week, we’re going to begin where we always do with that very important US Dollar Index. Now again, we’ve got very, very heavy verified resistance in this particular area between 103.54 and approximately 104.79. This would be our sell area here. The indicators, the predictive indicators in the Vantage Point software, are warning. They’ve been warning us for several days now that the dollar is getting ready to move lower. We can see the angle of the predicted RSI, the predicted differences here. The pink line, just for those who are not aware, is measuring the strength of the medium-term trend against the longer-term trend. As we can assess, as the market moves higher, the Vantage Point medium-term predicted difference and the short-term predicted difference are moving lower. The angle of the predicted difference is another very important feature in the VP software. It’s telling us we’re losing momentum here. So again, the seasonal pattern in the dollar, usually in the month of October, that’s it for the dollar, and it usually sells off into year-end, usually until about mid to late January. So for now, watch this level right here, but longs are very, very risky.
Gold
Now, the directly correlated markets that we look at are gold. Gold is another warning sign that the dollar is getting ready to soften here. We’re breaking higher; we’re holding above our monthly opening price. That key level of the monthly opening and the new quarterly opening, 2634, is a critical area of support. Now again, I always warn everybody, guys, we don’t want to pick random dates in our assessment of performance, cherry-picking levels over here, or co-mingling months together. We want to focus on what’s going on in October. September has passed; it’s in the rearview mirror, guys. So when we look at this right now, all of our support is down here. Both gold and silver aggressively moved higher this past week, once again warning us that we’ve got a problem with those dollar longs. So for now, as long as we hold above this area, we’re good. We’re getting a little bit overbought on the predicted RSI, but the predicted differences are saying we have further upside potential.
S&P 500 Index
Now, the S&P 500, again, we’ve got a new verified resistance high that’s coming in at about 5871. That’s a bit of a problem area up here. Ultimately, I believe, after we have a retracement back towards our T-cross long at 5773, then we can make the next leg up into year-end, into November and December. So for now, those are our key levels, but I will warn everybody, we do have an MA diff cross here on the medium-term over the long-term predicted difference, which is suggesting there’s a little bit of weakness ahead here. So, let’s let it retrace; we’ll reassess, but again, much like gold, this is the one thing I love, guys, about the start of a new quarter. We know exactly where our key levels are. We don’t want to look at the past 5 days, the past 30 days; they’re irrelevant from a performance basis. The month of September, excuse me, has passed; the month of October is our focus. The quarter, the new start of a new quarter, is even more reason to disregard any systems that look at random performance models because it can be very, very misleading where they will say, “Oh well, okay, you know the S&P 500 over the last x amount of days is up 13%, 10%, 11%, 133%,” when in actual fact, it’s not. So again, I am expecting some type of a retracement, and we’ll reassess once that has occurred.
Bitcoin
Now, when we look at Bitcoin, once again, not a big surprise what’s going on here. I’ve tried my best to warn everybody over the last three months that October is a strong month for Bitcoin. So now we’ve closed the week out here at 68,000, just above this verified resistance high. So again, we’ve, I think it that we should still be cautious up here, but it is looking much, much better. This verified resistance high that’s coming in at 66,451 is another area of support we can monitor, but I do expect we will continue to move higher, at least for another week or two in Bitcoin, but a very aggressive move in the month of October, we look to build on that. Now, the predicted differences are a little shaky up here, but the position of the neural index strength, I really like. The predicted RSI still has room to extend, but again, our T-cross long at 64,328—that would be our retracement point. But I’ll warn everybody here that if we do have further upside toward the 82,000 mark this month, then 66,451 will act as a breakout point, but we just have to make sure it’s not a bull trap up here. But we can see our verified resistance high that’s coming at 69,898—that is our current target on the Bitcoin contracts and anything related to Bitcoin.
Light Sweet Crude Oil
Now, light sweet crude oil, really taking a hit here, breaking back down below its yearly opening price. I had warned everybody in the previous weekly outlook that this is not the time of year to be buying oil. We’ve come up near our verified resistance highs; we have two up here, 78.56, and we have another one sitting there at 77.23, and an epic failure into that area. At this time of year, it’s usually natural gas that moves higher. It too is under a little bit of pressure, but if I’m looking at the difference between these two commodities—oil and natural gas—I would lean towards natural gas going into the heating season.
Volatility Index ($VIX)
Now, when we look at the VIX, again, the VIX is very important that we monitor this. We’re breaking down below our T-cross long, but we’re still above the monthly opening price, which is concerning. We’re still above the yearly opening price, and respectfully, that’s why I think the equities can pull back a little bit, and we should be patient with them. Focus on gold, focus on Bitcoin, dollar shorts, the commodity sector, potentially not gas. These are the contracts we would keep an eye on, but the predicted differences are also breaking down below the zero line, so there is that scope for further upside with the equities. They do seem unstoppable, I’ll give the market that, but we still need to be cautious because, again, the VIX is positive on the year, and we remain positive in the month of October. Once again, without sounding like a broken record, guys, we don’t want to be looking at these rolling performance models and co-mingling August and September with the month of October; they are completely different. We start the fourth quarter, and we also start the US fiscal first quarter, where predominantly, the US does dollar does very poorly, so these seasonals are in play, and we simply cannot ignore them.
DAX
Now, a quick peek at the European markets—they too are doing well. We can assess here a high correlation between the DAX and the S&P 500. So again, a little bit of a mixed signal there. That MA diff cross is concerning, and I will also use the DAX to gauge the strength of the Dow, the Nikkei, the S&P 500; they’re all globally tied together, guys, in one way or another. So this area up here, as long as we look good on the DAX, just like the S&P 500, provided we’re holding above that very important quarterly opening price at 1949.
Euro versus U.S. Dollar
Now, as we move off into some of the Forex pairs, there’s going to be a lot of activity on the Euro next week, but again, I do see this as a potential buying opportunity. I have a strong verified support low at 1.0778; it is more than reasonable to attempt longs at that area only because of the time of year we’re in. Now, obviously, the ECB is likely going to cut; there’s going to be a lot of rhetoric there, but when we look at the predicted RSI and the neural index strength, it is pointing towards upward momentum. So we have our Thursday low, which is 1.0812, and then we have the additional verified support low at 1.0778 approximately. Keep a very close eye on this, but a counter-trend long is certainly reasonable because the indicators are warning us of that with the MA diff cross, the neural index strength, and again, the predicted RSI is losing that downward momentum.
U.S. Dollar versus Swiss Franc
So if that is correct and the Euro US is getting ready to move higher, then US Swiss Franc would be getting ready to move lower. Again, very strong verified resistance at .8749. I am not convinced we will hit that level, but we might, but either way, these indicators are warning that this pair is losing momentum, again pointing to dollar weakness. So if nothing else, guys, likely a retracement to the T-cross long at .8575.
British Pound versus U.S. Dollar
Now, with the Pound Dollar, another big one going into next week, we’ve got a Wednesday—some movement on the downside—so the Thursday low there is 1.2974. We remain positive on the calendar year but negative in the month of October. The further we move away from the monthly opening price, guys, and the new quarterly opening price, the more likely it is we’re going to retrace exactly back to that level. So the indicators in VP are picking up on bullish momentum on this particular pair, and again, this is an outlook, not a recap of something that happened last week. This is for the week of October the 21st, guys, not for anything that happened last week; that’s no longer relevant to us. We’re focusing on opportunities for next week while the markets are actually closed to really show the power of the VP software.
U.S. Dollar versus Japanese Yen
Now, with the Yen, we actually did this one in the Vantage Point live training room this past week, and I had warned everybody that if we break above 150, then that could be it for this pair. So we broke here above at 150.32, which I had briefly discussed in the other outlook the previous week that there is likely exotic barrier options protecting the 150. So once they push it through 150, it’s very unlikely we’re going to see any follow-through, and that could be it for this pair. Now, the carry trade is still in play here, guys, but as you can see, the new verified resistance high at 149.98 is actually still holding. So a retracement to the T-cross long next week, 147.82—if we can break down below that, we have a much greater short coming, in my respectful opinion. If we look at even in the previous calendar year, you can see that the Dollar Yen had capped out by early November and then it sold off right into the year-end. That is a consistent seasonal pattern that I would not, respectfully, ignore.
U.S. Dollar versus Canadian Dollar
Now, when we look at some of the additional equity-based currencies like the US CAD, very significant resistance to 1.3946. We have a new lower high that’s coming in at 1.3839. So for next week, guys, to simplify this down, that’s where our first resistance point is; our second resistance point is at the other verified resistance high. So what I’ve done in the past at different seminars, etc., is I’ve shown people how to draw proper trend lines. So if I draw a trend line off of these two bars, you can see that that’s intersecting, coming in at or about the 1.138 level. So we’ve closed right up on it, but guys, watch this area right here. I think you have a short trade coming on this one. The MA diff cross is pointing down; the neural index strength, I will concede, is still showing bullish momentum, but remember, this pair has a Monday-Tuesday reversal that’s very pronounced, meaning whatever it does on Monday, it does the exact opposite on Tuesday. So I would again, respectfully submit to get your popcorn and stand on the sidelines, see what it does Monday afternoon, and if it goes screaming higher on Monday, then shorts are absolutely viable for Tuesday.
Australian Dollar versus U.S. Dollar
Now, the Aussie US, it is starting to rebound here, which is what I was looking for. We’ve got a low and a new verified support low at .6659. The indicators in VP are turning bullish on this pair. Longs are reasonable as long as we’re not closing two days in a row below .6659. The indicators are warning us for next week while the markets are closed; there could be a long trade here. We must, however, clear that T-cross long at .6753.
New Zealand Dollar versus U.S. Dollar
We are going to see a very similar trade setup with New Zealand US. We can assess that we’ve got a new verified support low on this pair also. That one coming in at .6040, then our retracement point, the T-cross long at .6139. I’m going to give you two different scenarios here. We can trade long up to that area, or the more savvy or the more conservative traders, they can put their buy limit orders above the T-cross long at .6139, and if and when it does cross over that area, then we’re sitting there waiting for it. And that is the benefit of looking at a true outlook versus a market recap. So, with that said, this is the Vantage Point AI Market Outlook for the week of October the 21st, 2024.
