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 April 2019
For the month of April, we forecast that the best trade will be short EUR/USD.
For the month of March, we forecasted that the best trade would be long GBP/JPY. The forecast’s final performance is shown below:
Weekly Forecast 31st March 2019
Last week, we made no weekly forecast. This week, we again make no forecast, as there were no large counter-trend price movements over the past week.
About 30% of the important currency pairs or crosses moved by more than 1% in value over the past week. Volatility is likely to increase over the coming week.
This week has been dominated by relative strength in the Australian Dollar, and relative weakness in the British Pound.
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:
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 1.3249 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 rejected this level right at the start of the London /New York session overlap (a great time to trade major currency pairs such as GBP/USD) last Tuesday, turning immediately bearish with a pin candlestick which broke down from a V-shaped inflection right away. This trade was profitable, achieving a maximum positive reward to risk ratio of approximately 2 to 1.
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.