Trading Support and Resistance

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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 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:

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Monthly Forecast October 2019

For the month of October, we forecasted that the best trades would be long GBP/USD and long GBP/JPY. The performances to date are as follows:

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Weekly Forecast 27th October 2019

Last week, we made no weekly forecast as there were no very strong countertrend movements. This week we again make no forecast.

The Forex market has become less active, with only 19% of the important currency pairs and crosses moving by more than 1% in value over the past week. However, volatility is likely to rise sharply next week.

Last week was dominated by relative strength in the Canadian 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:

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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 74.77 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work really well. The H1 chart below shows how during last Tuesday’s Asian session, the price bounced strongly off that level, forming a bearish engulfing candle marked by the down arrow in the price chart below, which immediately broke down. This trade has given a maximum reward to risk ratio of nearly more than 3:1 so far.

audjpy

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.

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