Vantagepoint AI Market Outlook for October 17, 2022

Welcome to the Artificial Intelligence Outlook for Forex trading.

VIDEO TRANSCRIPT

U.S. Dollar Index ($DXY)

Hello everyone and welcome back. My name is Greg Furman and this is the Vantage Point AI market outlook for the week of October 17th, 2022.

Now to get started this week, we’ll begin where we always do with the very important US dollar index. Now we can see that the dollar index is remaining above the monthly opening price and firmly above its yearly opening price at $95.64. Still bullish predominantly. We can see that our Neural index strength is turning back up. We have a MA diff cross suggesting the short, medium, and long term trends are still intact with the dollar. It’s still moving higher. We’ve got our inflation data last week. A lot of rumors going around, but very little is changed. We had some whipsaw action as we always do on Thursday trading and profit taking only for the dollar to rebound on Friday.

U.S. Dollar Index ($DXY)

Again, you’ll notice that it’s coming down to the predicted moving average, the TCross long, 112.01. That is our support level for the beginning of the week that is intersecting with the monthly opening price. Now, my concern here is that in most cases when that predicted moving average crosses over the monthly opening price, we can see a bigger potential move pending. I don’t think I’ve heard anything in the inflation data that’s going to have the fed pause or pivot or reverse it’s decision on anything, but we won’t know that either way till November 2nd and the dollar is likely to remain strong prior to that.

We can see that our predicted RSI holding above the 50, now breaking above the 60 level suggesting that we have momentum pending. Always remember that Monday is not usually a true price. Then we have a bit of a reversal on Tuesday and that’s when we start to see the real price mid to late day Tuesday and then a significant move on Wednesday so be prepared for that.

S&P 500 Index

S&P 500 Index

Now, indisputably right now, I think it’s pretty much finally become common knowledge here that the major inner market correlation that we need to watch in this particular case is the inverse correlation between the S and P 500 or the global stock markets and the dollar index. What we can assess here is once again, we get a fake move. On a Thursday, we come up, we hit the vantage point TCross long 3711.96. We do the same thing, or we open at that price on Friday. Then another significant failure. Now we are closing below the monthly opening price.

I would argue again, so when we bring this out to the monthly timeframe using the VP plus, we can actually see here how bearish this actually looks. The month of September was pretty horrible and the month of October is not a lot better here, guys.

Again, the structure of this is suggesting that we could be looking potentially at a much bigger move to the downside coming before there’s any kind of moderate recovery. Now, with the US primaries coming in November, in most cases the seasonal pattern is stocks would rally a little bit going into that, maybe December, but my optimism on that even now remains guarded.

Unless we can get back up above this monthly opening price but as you can see, the yearly opening price clearly dictates what the trend is on the S and P and the global stocks. It’s down guys. When we simplify it this way, then we have a better idea and that maybe we won’t get caught up in this intra day nonsense. Once again, very choppy conditions whenever there’s any kind of inflation data, but for now, very little is changed. These are all simply retracement in the broader down trend.

Now, if we can get above the vantage point TCross long at 3,700 and stay above it for several days, then we can look at potentially a new trade forming, but I don’t think we’re there just yet.

Gold

Gold

Now, of course with this dollar strength, we’ve also seen it pushing gold prices back down. We had some open interest in gold right at the beginning of the month. That fizzled out very quickly on the inflation numbers, the fed rhetoric, a lot of the rumors going around, but for now, gold turning bearish again. Just to point this out again. When we look at the yearly opening price at 18.29, we spent very little time, if any, above that particular price.

You can see going back here into the beginning of the year, we were trying to hold above it, but as we broke down, we were traced back up to it and then down we go again. Unless there’s a major shift in Fed policy, then gold remains bearish. These indicators, the predicted differences, pointing down neural index strength failing at the zero line, and of course the breakdown below the vantage point TCross long at 18.29. Multiple retracement back up to that exact level and then down we go again. This points that this coming week we are likely, at the very minimum, we are likely to hit the 16.16 mark.

Now as we look at light sweet crude oil, oil prices again, a bit of a rally to begin the month. Now this particular setup is a little stronger because you can see we’re above the yearly opening price, we’re above the monthly opening price, but we’re closing below the vantage point TCross long. The question is, can we get back up above it?

Crude Oil

Crude Oil

Now as we look at light sweet crude oil, oil prices again, a bit of a rally to begin the month. Now this particular setup is a little stronger because you can see we’re above the yearly opening price, we’re above the monthly opening price, but we’re closing below the vantage point TCross long. The question is, can we get back up above it?

I think longs are still reasonable. I think I would like them a little bit lower between 81.02 and 75.39 but again, the indicators here are warning that we could be looking at a little bit more downside, but I think at the present time, it’s still a buying opportunity while above 75.39.

Bitcoin

Bitcoin Weekly Chart Last 9 months

Now Bitcoin once again still running flat here, but Bitcoin holding up a little bit better than the S and P, but not much guys. What we have to understand, it’s virtually the same trade. S and P goes down, it pulls Bitcoin down with it but there is that strong seasonal pattern in Bitcoin that occurs in the month of October. We’ve seen some rallies, but nothing strong. Again, we’re looking for that inner market correlation to break down and to see if Bitcoin can move up on its own, even if the stocks go down. I don’t think that that’s likely at this time respecting the NASDAQ, the semiconductors, all of these things, the tech sector’s not doing well at all so that’s hurting Bitcoin, but ultimately it’s still, in my respectful opinion, based on the 10 year history, it’s still a decent buy on dips, but I don’t think we found a bottom yet on the S and P 500 or Bitcoin.

Euro versus U.S. Dollar

Euro versus U.S. Dollar 52 Week Chart

Now, as we move into some of our main Forex pairs going into next week, the one that I think most eyes are on is of course the number one traded Forex pair, which is the Euro/US. Still bearish here, structurally struggling. Now, I do expect some kind of rally out of the Euro, but it’s going to be more difficult the closer we get to November 2nd, unless we get comments from, again, one of the Fed members. Again, they are contradicting themselves. I’m fully aware of that. That’s pretty much par for the course with these guys.

If we look at it, we focus on our main level, our TCross long, 97.87. As long as we’re holding below that, things still look pretty good. Now the monthly opening price, 97.86, but as you can see the yearly opening price, this blue one that I’ve identified up here, 113.67. Indisputable down trend here, guys, indisputable. Again, we’re looking for some kind of signal of dollar weakness or pending dollar weakness, and there isn’t a lot on the horizon, at least until after November 2nd or the day of November 2nd where we hear what the Fed’s current plan is.

Right now, again, watch this level very closely, 97. 87. As long as we hold below that, you can see nothing pretty here, guys, but it makes money. Just selling into that predicted moving average on a daily basis because it’s not making a strong move. Now the predicted differences are pointing down, predicted RSI failing at the 50 level, breaking the 60 level once again suggest the Euro is getting ready for yet another move lower possibly towards the 90, the 95 level.

U.S. Dollar versus Swiss Franc

U.S. Dollar versus Swiss Franc

Quickly looking at the US/Swiss Franc, which often mirrors Euro/US one down, one up. We can see that it’s pushing higher, finally breaking above parody. Shockingly, it’s taken this long, but again, it is still a form of carry trade. Our TCross long coming in at the 99 level. The main indicators are saying we do have further upside here, guys, so I don’t think it’s a cell just yet. Ultimately, I believe it will be, but not until we see some kind of change from the Fed. Right now we would look at our retracement points.

Now, when using the predicted high and predicted low, the predicted low here is 1.00.18, but the vantage point TCross long is 99 so you’ve got a bit of a gap in price, and I prefer to let that gap fill before I stay with the primary trend.

British Pound versus U.S. Dollar

British Pound versus U.S. Dollar Weekly Chart Last 6 months

Now looking at the pound/dollar, again, all eyes on this pair too. All kinds of nonsense going on in the UK with the tax cuts. The finance minister, I believe was just terminated by the new PM. Again, a lot going on and usually when you’ve got political turmoil, energy crisis, all these things, I tend to shy away from that, especially when the US dollars already the most volatile Forex pair in the G7. Again, I would be very cautious, but I would also suggest that looking closer at this, the yearly opening price, 135.31. 111.58, if we cannot stay above 111.58 and the TCross long at 111.97, then the probability is we’re going to return to the lows at the 103.49 area so keep a close eye on this guys. These are the two levels. I believe that all of our support and all of our resistance is sitting right around this.

Once again, I’ll quickly reiterate this. I probably get more emails on the S and P 500 pound/dollar and Euro/US than anything else. Again, we’ve got strong verified resistance up here now, 114.95 which was a breakout point. Again, when we look at this, a breakdown below 111.58, that would be a trigger point for me that we are going lower.

U.S. Dollar versus Japanese Yen

U.S. Dollar versus Japanese Yen 52 Week Chart

Now, as we look at the dollar/yen, this pair, again, cannot seem to find a top. I believe when it does, it will sell off viciously but I also don’t believe that that’s any time soon. The carry trade is in full force here, guys. When you look at the interest rate differential right now between the US and the Bank of Japan, the Federal Reserve and the Bank of Japan, very few people want to hold Japanese Yen and just about everybody wants to hold the dollar because you’re getting paid swap to hold that trade.

Pretty nice. Take a trade based on somebody else’s money on leverage or margin, and then have them pay you for holding their money. Well, isn’t that kind of what the banks have been doing to us for many, many years here, guys? Again, think about that for a minute. Whenever you’re trying to pick a top on this pair because for now it does look set to extend its 34 year highs. I can’t believe I’m saying that, but yes, we’ve been overbought. We’ve been overbought for months. It has had zero bearing on this because the fundamental of the interest rate differential is taking firm hold with that carry trade.

U.S. Dollar versus Canadian Dollar

U.S. Dollar versus Canadian Dollar Weekly Chart

Now, as we come into some of our equity based currencies is what I like to call them anyway, because that’s what I see with them more than anything, the Canadian, the Aussie, and the New Zealand, they all are tied to the S and P so if the S and P 500 does break down which is basically what we’re anticipating, probably a move towards 3,200 on the S and P 500, that would be a catalyst to push US/Canada higher, to push Aussie/US lower, push New Zealand/US lower, but we need that to occur.

Right now, the US/Canadian has managed finally to close above its monthly opening price, but it’s yearly opening prices is 126.37. Firm up trend here, Neural index shifting going higher. MA diff cross with the Neural index, but here’s the deal guys. This pair will probably sell off tomorrow on Monday morning. When it does sell off, that’s a buying opportunity because the reversal rate on this pair from Monday to Tuesday is 90% so whatever it does on Monday, it does the exact opposite on Tuesday so be careful of it.

Our main TCross long, the level that we want to watch, that’s at 136.44. That’s a pretty good area to pick up your longs. We’ve got our predicted low at 137.73, but you can see that there’s 110 PIP gap between the predicted low and the major support level, which is the TCross long. You want to fine tune your entry point within that block because again, this is an outlook, guys. Not a recap of something that already happened so we pre-identify these positions before the market is even open.

You can see on my computer that this outlook is being done at 12:10 PM on Sunday afternoon while the markets are closed. I did get a question on that the other day. Well, why is the outlook a day before the market open? Well, the simple answer guys, is that it is just that, it’s an outlook. We’re identifying levels that are tradeable. We identify what the indicators are saying. Is it up, down, sideways? What is it?

This is how I would look at this. While the predicted low is very powerful, we have a gap in price and I will allow for that gap to be filled closer to 136.44.

Australian Dollar versus U.S. Dollar

Australian Dollar versus U.S. Dollar 52 Week Chart

Same thing would apply to the Aussie/US and the New Zealand/US. We can see that we are closing very low, 61.94, but our TCross long is 64.26 so there’s a significant gap.

The predicted high for Monday is again coming in at about 62.40, but we’ve got close to a, actually we’ve got about a 200 PIP gap in price here. Let the gap fill a little bit. Don’t jump in too early, let that gap fill. The primary indicators are definitely still down, but there is room for retracement. The retracement is based on a mean revision theory that essentially there’s too many sellers in here and you’re going to run out of sellers here pretty soon. Then the buyers come in and they’ll start scalping and picking up trades.

New Zealand Dollar versus U.S. Dollar

New Zealand Dollar versus U.S. Dollar 52 Week Chart

I believe they will do the same thing with New Zealand, but New Zealand has better value because you can see New Zealand, there’s far less of a gap here. If we look at the predicted high at 56.15 and the TCross long at 56.99, that is a far more attractive short here, wouldn’t you say? Because again, we can condense our stop loss. We have the exact same signal with the Neural index strength, with the Neural index, with the predicted differences. The same signal is there, but there’s less risk because our stop loss can be smaller. We can put our stop loss above our TCross long or above the verified resistance high at 58.13. That’s your choice. Always keep your money management in check and don’t risk more than in my respectful opinion, only one to one and a half percent of the overall value of the account.

With that said, this is the Vantage Point AI market outlook for the week of October the 17th, 2020.