Trading Support & Resistance - 9 July 2017

Sunday, 9 July 2017 9:56

By: DailyForex.com

This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 11 years of Forex prices, which show that the following methodologies have all produced profitable results:

· Trading the two currencies that are trending the most strongly over the past 3 months.

· Assuming that trends are usually ready to reverse after 12 months.

· Trading against very strong counter-trend movements by currency pairs made during the previous week.

· Buying currencies with high interest rates and selling currencies with low interest rates.

Let’s take a look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:

Table 01

Monthly Forecast July 2017

This month, we forecasted the highest-probability trade as long EUR/USD. The performance to date is very slightly negative:Table 02

Weekly Forecast 9th July 2017

Last week, we made no forecast, as there were no strong counter-trend movements.

This week, we again make no forecast, as there again were no strong counter-trend movements.

This week has been dominated by relative strength in the Canadian Dollar, and relative weakness in the Japanese Yen.

Volatility was significantly lower than last week, with only 26% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be similar over this coming week. You can trade our forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

We teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:Table 12

Let’s see how trading two of these key pairs last week off key support and resistance levels could have worked out:

AUD/JPY

We had expected the level at 85.76 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows the how the price bounced bullishly off this level four times, giving three winning trades with maximum reward to risk ratios greater than 1 to 1. The final entry was the best trade of all.

AUDJPY

USD/CHF

We had expected the level at 0.9678 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows the how the price initially hit this level around Wednesday’s London open – typically a good time to trade this currency pair - and formed a bearish pin candle, providing a possible short trade entry marked by the down arrow in the chart below. This short trade would have given an excellent maximum reward to risk ratio of more than 3 to 1 so far.

USDCHF

You can trade our forecasts in a real or demo Forex brokerage account to test the strategies and strengthen your self-confidence before investing real funds.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment. Learn more from Adam in his free lessons at FX Academy.

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