Trading Support and Resistance - 1 October 2017

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 16 years of Forex prices, which show that the following methodologies have all produced profitable results:

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:

Chart 1

Monthly Forecast October 2017

For the month of October, we forecast that the best trade will be long GBP/USD.

Weekly Forecast 1st October 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 Swiss Franc, and relative weakness in the Australian Dollar. However, these movements do not look very significant.

Volatility was about the same as last week, with approximately 37% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be higher 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:

Chart 2

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

GBP/USD

We had expected the level at 1.3344 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 how after holding more or less to the exact pip, the price bounced bullishly off this level and made a bullish inside candlestick which broke bullishly straight away (marked by the upwards arrow in the chart), early during the London session, which is typically a good time to enter a trade in a currency pair involving the British Pound. The maximum reward to risk ratio reached has so far been just about 2 to 1, although the stop loss has not yet been reached so the result could be higher still.

GBPUSD

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 Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.