Welcome to the Synthetic Intelligence Outlook for Foreign currency trading.
Hiya everybody and welcome again. My title is Greg Firman and that is the VantagePoint AI Market Outlook for the week of July the nineteenth, 2021. Now to get began this week, we’re going to start with, once more, the U.S. Greenback Index and proceed studying about interior market correlations and the way they have an effect on the markets that we’re buying and selling. One of many best benefits that interior market correlations have with utilizing synthetic intelligence is after all eradicating a substantial quantity of lag from the system. So we all know what a few of these interior market correlations are that we’ve been engaged on for the final a number of weeks. Then we will higher perceive that when one market strikes, it can transfer a number of different markets.
U.S. Greenback Index
Now, as we have a look at our evaluation with the Greenback Index into this coming week, the greenback remains to be exhibiting indicators of life right here, nevertheless it’s unable to interrupt via these verified resistance highs coming in at roughly 92.82. What we would wish is a sustained break of this specific degree, however my optimism on additional greenback power above that degree even when we will get above it’s doubtless going to be restricted to the 93.50 space, 93.43, the yearly excessive. So we’re above the yearly opening worth. We’re attempting to advance again in the direction of the yearly excessive level, however once more, struggling to get there.
Now indicators that we search for within the VantagePoint software program to warn us that we might have pending power. Primary, we wish to be above that T cross lengthy, that space 92.20. We’re additionally searching for a constructive neural index, constructive momentum. The medium-term is attempting to cross the long-term predicted distinction. Now this pink line crossing that blue line will inform us if the greenback, if this development goes to proceed again to the upside, however once more, we should clear these zones.
Now, once more, constructing on these interior market correlations. After we have a look at interior market correlations, we will view inside or beneath the hood of the VantagePoint software program. And we will see sooner or later facet, the Greenback Index having a each sturdy constructive and inverse correlation to the 10-year treasury be aware, we’ve bought the British pound, pure fuel, the Euro Dow Jones. In fact, we’re going to see gold. Now internally, we will break that down even additional by going to the extra particular extremely correlated markets. So if we have a look at these ones right here in inexperienced, they’re constructive and pink, they’re inversely correlated. So the highest 10 positively correlated markets, clearly the ProShares Extremely quick Euro. We’ve bought US-Singapore, US-Israeli shekel. The US-Mexican peso. Various totally different markets on the inverse facet of that.
We’ve bought Korea Electrical Energy, various totally different shares, New Zealand-US. The New Zealand greenback futures contracts, Aussie and basically what this implies is that if the greenback have been to go down, these currencies and these specific shares would rise. But when the greenback continues to advance ahead, these shares and these futures would proceed to maneuver decrease. Now I may break that down by yearly correlations, I can go to quarterly correlations and that grouping will change considerably. We will see now US-Swiss franc is in there. We will see NRG Power may be very positively correlated to the U.S. greenback.
BMO and the S&P 500 Index, there’s an 89% correlation. These are the issues we wish to search for in our buying and selling, however the principle correlations as we’ve mentioned during the last a number of weeks is that the one we actually wish to watch right here, guys, is gold.
Now, if we have a look at gold contracts and do a comparative evaluation to the Greenback Index, we will assess that this push decrease was clearly created largely by that retail gross sales quantity on Friday. However we have been unable to interrupt down beneath the T cross lengthy at 18.06. The market stopped lifeless in its tracks fee at that exact degree.
Now our medium-term crossing, our long-term predicted distinction is changing into problematic as a result of we’ve got a verified resistance excessive sitting on the 18.17 mark. I would like that we get again up above that degree in a short time. Now, you’ll additionally bear in mind going again a number of weeks in the past as that is an outlook, not a recap of one thing that’s already occurred. After we have a look at this, I had mentioned this a number of weeks in the past that the market shifting above this predicted shifting common by itself, there may be just about no lag in a setup like this.
In order quickly because the market crossed over, that extremely efficient VantagePoint predicted shifting common, that was a warning signal that mainly gold shorts are very dangerous down right here. Gold is proceeded to maneuver from the 1760 mark all the way in which as much as 1834 this week, however then we’ve bought hit with that very constructive retail gross sales quantity out of the U.S. sending gold again down somewhat bit. However once more, we should break down beneath 1800 to take the strain off the upside right here. As a result of once more, the greenback has been unable to clear that 90 to 80 mark, but when it might and it might shut above 90 to 80, that’s what will in the end put strain on gold to the draw back.
Now we’ve got closed ever so barely beneath that blue line, however once more, it’s Friday buying and selling right here, guys. I’m searching for gold to carry its floor and begin to get better once more by Tuesday or Wednesday. Now I did point out I did get a query final week in final week’s presentation in regards to the interior market correlations with U.S. treasury bond. So if we have a look at the treasury bonds, we will see right here that we’re holding above that key degree 161.21, we’re holding on that key degree.
U.S. Treasury Bonds
But when we have a look at the best correlated markets to the U.S. treasury bonds, I’ll go in right here and pull them instantly. And you may see that you just’ve bought the extremely U.S. treasury bonds is 99.63% correlated the iShares Barclay 20+ T bond 99.05% correlated.
iShares iBoxx funding grade. Once more, you possibly can see these markets right here which have an especially excessive correlation. Now you even have about 11 markets in right here the place there’s a correlation, nevertheless it’s not as sturdy. So what the software program or the AI is doing is pulling the best, the highest 10 and the highest 10 inversely correlated. So we will see each, as a result of once more, that factors to different trades. So basically if these treasury bonds go decrease than M&T Financial institution is probably going going to go larger, Tyson Meals will most likely go. There’s a 91.6% likelihood that Tyson Meals goes to go larger. Lots of people would most likely say, “What do bonds should do with Tyson Meals?” However that is the benefit of utilizing synthetic intelligence. It will probably go discover these interior market correlations for us.
After which once more, a number of trades could possibly be spinning off. The inventory trades could possibly be spinning is that if these treasury bonds go decrease. Casey’s Basic Retailer, 91.94%. Alaska Air Group at 92%. These are the issues we wish to search for in our buying and selling, guys. So basically if these bonds have been to begin shifting decrease, the markets that I simply confirmed you’d prone to a level of about 91% would reverse and begin going larger. Very, very fascinating stuff after we know what to search for. Now as we transfer into shares subsequent week, we’re one other sell-off. That is going to spook the market considering the fed goes to boost charges, however he’s been fairly clear that he’s not going to. The whole lot is transitory with this specific fed. And he’s a little bit of a cussed one.
S&P 500 Index
So proper now, personally I don’t suppose I might panic right here. We will see that final week we had a scare right here on the S&P 500. It got here right down to the T cross lengthy to the quantity at 42.85 and bounced and went all the way in which up right here to virtually the 4400 mark. So once more, I don’t suppose I might panic, guys, until we get these predicted variations shifting beneath the zero line, the RSI beneath 40. And once more, I at all times do like to use a two-day rule the place if this actually is a development change, we have to shut beneath that T cross lengthy at 43.24, at the least in my respectful opinion, two days in a row to get that affirmation. Plenty of false indicators can occur round a key help degree. And once more, we wish to be very, very cautious.
Now that gold’s backing off somewhat bit too, which may be one other indicator that shares are simply ramping again up for an additional transfer. So once more, the market’s very panicky it appears, however on Friday you’ve additionally bought plenty of revenue taking that may trigger a little bit of a false worth. Now with shares, if shares are capable of get better, then we’d additionally look to the interior market correlation to comply with. Then that after all goes to be mild candy crude oil.
So if we get these shares turning round, then we might see oil in a short time flip round additionally, we’re sitting at a verified help zone right here, a medium-term crossing the long-term predicted distinction is attempting to type proper now. I consider that that is an early warning signal that gold goes to bounce off of this, simply most likely beneath this 70 degree. Now we’ve closed at 72.45, however a really sturdy, verified help zone sitting at 70.27. We’d search for that to carry. If we break that, we’d have this extra transfer right down to the $69 mark. However once more, I consider that oil will maintain these two or three verified, these fundamental two verified help zones are prone to maintain, however we want shares going larger. The interior market correlation once more has just about zero lag.
If shares flip larger, then oil will doubtless comply with. That’s the one you wish to be sure to’re protecting a really, very shut eye on. Now, as we have a look at Bitcoin once more, going into this week, my view has not modified on Bitcoin. Once more, I’ve been concerned with Bitcoin for a lot of, a few years now and there’s plenty of noise on the market available in the market that Bitcoin’s a rip-off, Bitcoin’s this. I might advise to take that with a grain of salt as a result of the annualized returns over a 10-year interval on Bitcoin are substantial. They’re really the highest funding, I consider at about 230% on a 10-year annualized return foundation. So this could possibly be a really, superb shopping for alternative in uninteresting summer season months.
I’m not anticipating any large transfer in Bitcoin most likely once more not till nearer to September, most likely simply going to type of wander round. However so long as it’s above the 28,900 mark, we’re above that yearly opening worth, then Bitcoin may be very a lot nonetheless alive. If nothing goes straight up and nothing goes straight down. We’ve had an enormous transfer as much as this 61,000 mark. So a retracement decrease is completely regular. The important thing VantagePoint ranges we wish to look ahead to subsequent week is to see if we will get again up above 33,467.
However I feel the market will doubtless … Bitcoin towards the U.S. greenback will doubtless keep in a variety between 28,000 and doubtless in regards to the 35,000 mark till we get into, once more, nearer to September, however the indicators are mainly operating flat. You may see we’ve been operating alongside this decrease finish of this channel coming down into this 30,000 mark. I don’t consider that’s going to essentially change a lot, however once more, monitor that degree across the 28,000 mark. Now, as we transfer into a few of our Foreign currency trading for this week, as soon as once more the Euro not having too unhealthy of per week, however we nonetheless are unable to get above this T cross lengthy that now could be 118.67.
We do have the ECB arising this week, which is extraordinarily subjective in my respectful opinion. They might say something so it might ship the Euro screaming larger, or it might ship it screaming lowers. So I might think about we’re simply going to have place changes previous to that announcement, however no main shift I don’t suppose until we get an enormous spike up or down on gold. 90% of the time, the Euro goes to comply with that interior market correlation with gold. Now on a fast facet be aware right here, as a result of the Euro is the primary traded Foreign exchange pair, that’s value a more in-depth look or what we’ll name a deep dive into this.
So on a yearly foundation, the highest interior constructive correlation, clearly the Euro futures contract, that’s type of a no brainer, however you’ve bought some particular person shares. You’ve bought the New Zealand U.S. greenback, New Zealand futures, Korea Electrical Energy, we noticed that with the Greenback Index, it had an inverse correlation, nevertheless it’s a constructive correlation to the Euro. We all know that the Euro was 100% inversely correlated to the greenback or the Greenback Index. So you possibly can see how this Korea Electrical works its method in right here.
Euro versus U.S. Greenback
So if the Euro does go larger than this specific inventory, Imperial Metals, the CIG, these shares are prone to go up with it. Now, if the Euro sells off, then we’ve got the alternative facet of that. We’ve bought ProShares Extremely quick rising markets, Aaron’s particular person inventory. You’ve bought a collection of U.S. greenback payers Singapore, Swiss franc. The Greenback Index itself is proven up as an interior market correlation after we elevate the hood up a bit on a year-over-year foundation. Now once more, I can transfer that into the quarterly and to the month-to-month correlations, however the yearly is probably the most steady. In my respectful opinion, these correlations they go away briefly, however they at all times come again on the long term foundation.
So after we have a look at these markets it’s completely value a glance right here. After we look nearer beneath the hood of this with the Foreign exchange pairs, you possibly can see that that is what a man-made intelligence or neural networks have a look at, these further markets. They absorb Foreign exchange, ETFs, futures, and shares, all of those ones. We will click on on that on the futures facet. We will see the constructive and inverse correlations, the shares, ETFs, no matter we wish to have a look at or no matter we ask of the AI it can in flip give us a solution. We simply need to have the ability to extra talk higher with the synthetic intelligence so we will go and discover this stuff.
So proper now, the AI has clearly said that the Euro is weakening. It’s weakening once more. So after we have a look at our key blue line, our predicted shifting common by itself, you possibly can see we’re attempting to rise up above this blue line, however we’re actually struggling. So to begin the week, our two fundamental resistance factors are 118.18 and 118.67, the T cross lengthy. We have to clear that. And I might like to see these predicted variations shifting above this zero line. However as you possibly can see the market or this specific pair has been just about flat the higher a part of the week, little or no motion as we transfer into summer season buying and selling.
British Pound versus U.S. Greenback
Now, after we have a look at the pound greenback, once more, the pound greenback kind of following the Euro, I might argue it’s somewhat bit stronger than the Euro at instances relying what’s taking place with the Euro-Nice Britain pair. However this absolute very, very stiff resistance supplied to us by the VantagePoint AI software program, extra particularly the T cross lengthy. We’re getting all twisted up on this factor and it simply merely can’t push via it. And that’s why I’ve at all times stated, I like to make use of a two-day rule solely on an in depth.
Intraday buying and selling, guys, intraday nonsense, simply disregard that. We’re trying whether or not we will shut above or beneath a sure degree and it simply merely hasn’t been capable of do it. So we’re above the yearly opening worth at roughly 136.50. We have to maintain these help ranges. As a result of once more, the nearer we get to the top of the month, the extra doubtless it’s we’re going to see some greenback shopping for. However proper now, once more, that T cross lengthy coming in at 138.65, that’s the degree that we have to get again up above. The preliminary degree, although, we will see utilizing the precise predicted shifting common by itself is 138.22. So if we will push above 138.22 and once more, shut above it for at the least a few days in a row, then we’ve got a greater likelihood of this factor turning bullish once more.
In the end I consider it can, however the different interior market correlation, once more, we at all times wish to keep watch over is oil. There’s an unusually excessive correlation between shares and lightweight candy crude oil and the British pound. In order you possibly can see, mild candy crude oil reveals up in right here, so does the U.S. treasury notes, the Greenback Index, pure fuel and gold are all tied into this British pound. In order for you a cheat sheet for this, oil is the one to look at. Oil recovers, that’s undoubtedly going to be a constructive for each the British pound and the Canadian greenback.
So once more, if we will get above 138.22 and we get oil costs rising, my concern right here for that’s that we’ve got the medium-term crossing the long-term predicted distinction with the neural index and a breakdown on the RSI. This sign may be very seldomly fallacious. When these three indicators are mixed collectively, often you’re going to have greater pushes coming. So we’re searching for possibly another push to the draw back on the pound. After which we hope that … Not hope we’d count on it to begin to get better. As a result of once more, hope just isn’t a method, guys.
Now as we come into the extra pairs final week and during the last a number of weeks, constructing that basis in our interior market correlations, I additionally mentioned what would occur when gold went larger. I particularly said that three pairs primarily could be affected. The Euro would go larger, the yen would strengthen and the Swiss franc would strengthen. So U.S. was franc going decrease, US-Japan going decrease. There’s actual science behind why that occurred, guys and that science is interior market correlations.
U.S. Greenback versus Japanese Yen
So gold, if gold begins taking place, if gold can not maintain the degrees that I mentioned, then the greenback yen will reverse again to the upside. But when gold is just correcting decrease on that stronger U.S. retail gross sales quantity, then the greenback yen will proceed its decline right here. Now we’ve come up and hit that T cross lengthy. That’s why it’s crucial to know your ranges, guys. 110.29. That’s the road within the sand for us. If we will get above that degree, shut above it and gold begins pushing down beneath 1800, then the greenback yen will probably be a superb lengthy commerce. But when gold continues to advance, the greenback yen will proceed to say no.
Now we’ve got a medium-term crossing the long-term predicted distinction, however the neural index just isn’t in settlement. So we wish that neural index in settlement. And I favor it when that pink line, the medium-term distinction measures the power of the medium-term crossover. So I wish to see that up above the zero line earlier than I actually begin to chunk on these longs. However once more, guys, maintain a really shut eye on gold contracts as a result of they’ll in the end decide the route of this pair. Now, as we have a look at the three fundamental fairness/commodity-based currencies earlier than they within the years previous, they have been strictly commodity currencies.
U.S. Greenback versus Canadian Greenback
These are clearly equity-based currencies, the Aussie, the New Zealand and the CAD, all of them react to the inventory market going larger. Which means US-CAD decrease, Aussie-US, New Zealand-US larger. So if that S&P 500 can maintain the extent that I discussed, and we get via Monday into Tuesday, Wednesday buying and selling, S&P 500 is recovered, then US-Canada would doubtless fail at this verified resistance excessive at roughly 126.53. However bear in mind, the yearly opening worth is sitting at about 127.13. US-Canada just isn’t bullish on the 12 months right here, guys. Should you purchased US-Canada throughout this, you’ve really been shedding cash.
So we’ve bought to get again up above that yearly opening worth to really absolutely affirm that this pair is popping extra of a long-term bullish sign is forming. I don’t consider we’re there simply but. Our medium-term crossing our long-term predicted distinction proper up close to that verified excessive, that’s 125.90. And you may see we’re attempting to shut above that, that one’s too near name right here. However bear in mind, US-Canada is infamous for reversing no matter it does on Monday. So if this factor goes screaming larger on Monday, the chance on Tuesday, it goes the opposite method.
Australian Greenback versus U.S. Greenback
So as soon as once more, watch your interior market correlations right here. Should you’re watching this video and also you’re not a Foreign exchange dealer and also you’re a inventory dealer, otherwise you’re a Foreign exchange dealer, and also you’re not a inventory dealer you’re each buying and selling currencies, guys. The Foreign exchange man is buying and selling shares and the inventory man is buying and selling currencies. You guys simply don’t comprehend it, proper? So if the S&P and oil get better, that may once more put downward strain on this payer virtually instantly, I might argue the Financial institution of Canada this week nonetheless had a hawkish tone within the rhetoric. However oil costs, once more, the Financial institution of Canada ought to have despatched this payer significantly decrease, however the interior market correlations trump that, guys.
With oil worth goes down, the fairness markets extra particularly, the S&P 500 taking place, that was an excessive amount of for the Canadian greenback, the interior market correlations reign supreme ultimately. So keep watch over a reversal on these two aforementioned markets as a result of in the event that they reverse, so will this. The very same factor would apply to Aussie-US and New Zealand-US. So we’re pushing down beneath this help degree, but when we will get again up above that low of 74.10, then we might see a reversal level.
Now, once more, after we click on on our F8 in our software program, we will get very shut to cost motion utilizing the lengthy predicted by itself, 74.37. That’s the important thing degree. If we shut above that, we will get again up above that. Shares and oil get better, then you definitely’ll see the Aussie begin to come round. It’s going to flip again up. The identical factor will apply extra particularly to New Zealand. I might argue New Zealand. I’ve argued this previous week that New Zealand is the stronger one.
And once more, it’s nonetheless in bother right here, however not as weak as what the Aussie is, so we might get higher worth doubtlessly from the Aussie-US pair.
New Zealand Greenback versus U.S. Greenback
But it surely’s a really, very related commerce. So once more, if we will get a bow back-up above the T cross lengthy at 70.08, then that may set off a possible reversal. Our predicted variations, all three of them are stacked up alongside the zero line. The neural index is constructive. We’ve bought a reverse verify mark on the RSI, guys.
I feel anyone who’s watched these movies of mine for any size of time, you’ve seen that earlier than and that often factors to a reversal in the wrong way to the upside. So we do have a busy week forward of us subsequent week with the ECB, extra monetary information, however nonetheless some superb alternative earlier than we get into August commerce. So with that stated, that is the VantagePoint AI Market Outlook for the week of July the nineteenth, 2021.