Trading Support and Resistance - 23 September 2018

Adam Lemon

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:

table1

Monthly Forecast September 2018

For the month of September, we forecasted that the best trade would be short AUD/USD. The performance to date is as follows:

Currency Pair

Forecast Direction

Interest Rate Differential

Performance to Date

AUD/USD

Short ↓

0.50% (2.00% - 1.50%)

-1.33%

Weekly Forecast 23rd September 2018 

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

This week, we forecast that the AUD/USD currency pair will fall in value.

44% of the important currency pairs or crosses moved by more than 1% value over the past week. This volatility is relatively higher, and we expect it to be higher still over the coming week.

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

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: 0.7274, 0.7231, 0.7197, 0.7129

Resistance: 0.7321, 0.7382, 0.7479, 0.7510

EUR/USD

Support: 1.1732, 1.1659, 1.1609, 1.1566

Resistance: 1.1770, 1.1875, 1.1897, 1.1937

GBP/USD

Support: 1.3030, 1.2951, 1.2894, 1.2816

Resistance: 1.3217, 1.3350, 1.3482, 1.3521

USD/JPY

Support: 111.66, 111.43, 111.31, 111.08

Resistance: 113.13, 114.18, 114.74, 115.97

AUD/JPY

Support: 81.86, 81.81, 81.26, 81.02

Resistance: 82.60, 82.81, 83.45, 84.54

EUR/JPY

Support: 131.72, 130.70, 130.14, 129.97

Resistance: 134.12, 136.89, 137.56, 140.50

USD/CAD

Support: 1.2826, 1.2793, 1.2750, 1.2650

Resistance: 1.3011, 1.3089, 1.3118, 1.3281

USD/CHF

Support: 0.9500, 0.9384, 0.9248, 0.9087

Resistance: 0.9598, 0.9637, 0.9656, 0.9691

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 79.97 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 rejected this level close to the Tokyo open last Monday, marked by the up arrow in the price chart below, forming a bullish outside candlestick which broke up right away. This is often a great time to enter trades involving Asian currencies such as the Australian Dollar and the Japanese Yen, and such candlesticks of a good size are often useful indicators of reversals when their wicks reject key levels. This trade was profitable, achieving a maximum positive reward to risk ratio of a little more than 1 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

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.
Learn more from Adam in his free lessons at FX Academy

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