Trading Support and Resistance - 23 December 2018
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 December 2018
For the month of December, we forecasted that the best trades would be short EUR/USD, short GBP/USD, and long USD/JPY.
The performance to date is as follows:
Two weeks ago, we forecasted that the EUR/AUD currency cross was likely to fall in value. It did fall that week, by 0.63%, producing a winning trade. We make no forecast this week, as there were no exceedingly strong counter-trend moves last week.
Weekly Forecast 23rd December 2018
More than half of the important currency pairs or crosses moved by more than 1% in value over the past week. Volatility has increased substantially, as is likely to remain relatively high this week despite the holidays.
This week has been dominated by relative strength in the Japanese Yen and relative weakness in the Australian Dollar.
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:
That’s all for this week. 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.