Trading Support and Resistance - 10 June 2018

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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:

Currencies

Monthly Forecast June 2018

For the month of June, we forecasted that the best trade would be long USD/SEK. The performance so far has been negative, as shown below:

Currency Pair

Forecast Direction

Interest Rate Differential

Performance to Date

USD/SEK

Long ↑

2.25% (1.75% - -0.50%)

-1.31%

Weekly Forecast 10th June 2018

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

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

This week has been dominated by relative strength in the Euro, and relative weakness in the U.S. Dollar and Japanese Yen, but the weak numbers were small enough to be relatively negligible.

Volatility was extremely low last week, with not one of the major or minor currency pairs changing in value by more than 1%. Volatility is likely to be much higher this week.

You can trade our forecasts in a real or demo Forex brokerage account.

Previous Monthly Forecasts

You can view the results of our previous monthly forecasts here.

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:

Currency Pair

Key Support / Resistance Levels

AUD/USD

Support: 0.7559, 0.7510, 0.7479, 0.7453

Resistance: 0.7603, 0.7641, 0.7719, 0.7740

EUR/USD

Support: 1.1732, 1.1709, 1.1648, 1.1600

Resistance: 1.1792, 1.1875, 1.1897, 1.1937

GBP/USD

Support: 1.3338, 1.3300, 1.3261, 1.3221

Resistance: 1.3482, 1.3521, 1.3601, 1.3666

USD/JPY

Support: 109.07, 108.05, 107.49, 107.27

Resistance: 109.61, 109.85, 110.40, 110.58

AUD/JPY

Support: 82.60, 81.73, 81.35, 80.42

Resistance: 83.34, 84.54, 84.83, 85.44

EUR/JPY

Support: 127.32, 126.35, 125.60, 124.71

Resistance: 129.28, 129.90, 131.61, 132.57

USD/CAD

Support: 1.2826, 1.2793, 1.2750, 1.2650

Resistance: 1.3047, 1.3141, 1.3190, 1.3254

USD/CHF

Support: 0.9827, 0.9679, 0.9500, 0.9384

Resistance: 0.9913, 0.9936, 0.9985, 1.0005

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

AUD/JPY

We had expected the level at 84.54 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 hit and rejected this level right at the start of the Asian session last Thursday, a time of day which is often good for entering trades in Asian currency crosses such as this one. It made a sharp rejection to the pip, printing a bearish engulfing candlestick immediately following the rejection of the level, signaling a short trade entry shown by the downwards arrow. Despite the very large candle naturally giving a large stop loss, this trade has been profit, achieving a maximum positive reward to risk ratio so far greater than 3 to 1.

AUDJPY

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 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.