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:
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:
Monthly Forecast June 2018
For the month of May, we forecasted that the best trade would be long USD/SEK. The final performance was positive, as shown below:
Currency Pair | Forecast Direction | Interest Rate Differential | Final Performance |
USD/SEK | Long ↑ | 2.25% (1.75% - -0.50%) | 1.22% |
For the month of June, we again forecast that the best trade will be long USD/SEK.
Weekly Forecast 3rd 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 New Zealand Dollar, and relative weakness in the Euro, U.S. Dollar and Japanese Yen, but the weak numbers were negligible.
Volatility was very low last week, with approximately only 4% of the major or minor currency pairs changing in value by more than 1%. Volatility is likely to be similar 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: 0.7555, 0.7510, 0.7479, 0.7453 Resistance: 0.7621, 0.7719, 0.7740, 0.7860 |
EUR/USD | Support: 1.1648, 1.1600, 1.1554, 1.1496 Resistance: 1.1748, 1.1769, 1.1875, 1.1897 |
GBP/USD | Support: 1.3308, 1.3265, 1.3221, 1.3112 Resistance: 1.3377, 1.3409, 1.3482, 1.3521 |
USD/JPY | Support: 109.07, 108.05, 107.49, 107.27 Resistance: 110.40, 110.58, 110.86, 111.75 |
AUD/JPY | Support: 82.67, 81.73, 81.35, 80.42 Resistance: 83.33, 84.54, 84.83, 85.44 |
EUR/JPY | Support: 126.35, 125.60, 124.71, 123.75 Resistance: 129.28, 130.05, 131.61, 132.57 |
USD/CAD | Support: 1.2914, 1.2826, 1.2793, 1.2750 Resistance: 1.3047, 1.3141, 1.3190, 1.3254 |
USD/CHF | Support: 0.9865, 0.9810, 0.9679, 0.9500 Resistance: 0.9913, 0.9936, 0.9985, 1.0005 |
Let’s see how trading two of these key pairs last week off key support and resistance levels could have worked out:
GBP/USD
We had expected the level at 1.3221 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 hit and rejected this level during the first half of the London session last Tuesday, a time of day which is often good for entering trades in this currency pair. It made a sharp rejection, printing a bullish engulfing candlestick which rejected the level decisively, signaling a long trade entry shown by the upwards arrow. This trade is in profit, achieving a maximum positive reward to risk ratio so far greater than 1 to 1.
USD/CAD
We had expected the level at 1.3047 might act as resistance, and that the level at 1.2826 might act as support, as they had each 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 the resistance level at 1.3047 during the first half of the London session last Tuesday, a time of day which is often good for entering trades in currency pairs, signified in the price chart below by the downwards arrow. It fell all the way to the support level at 1.2826, printing a bullish engulfing candlestick which rejected the level decisively, signaling a long trade entry shown by the upwards arrow. This trade is still in profit, having achieved a maximum positive reward to risk ratio so far greater than 3 to 1.
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.