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 November 2019

For the month of November, we forecasted that the best trade would be long GBP/USD following a daily close higher than 1.3081. There has not been a daily close above that level yet.

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Weekly Forecast 24th November 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 much less active, with none of the important currency pairs and crosses moving by more than 1% in value over the past week. Volatility is likely to be at a similarly low level over the next week. There are no strong trends in the Forex market as present.

Last week was dominated by relative strength in the U.S. Dollar, and relative weakness in the Swiss Franc, but the respective values were very low and so unlikely to be significant.

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 two of these key pairs last week off key support and resistance levels could have worked out:

EUR/USD

We had expected the level at 1.1093 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work very well. The H1 chart below shows how at last Thursday’s New York open, the price bounced strongly off that level, forming a large bearish outside candlestick marked by the down arrow in the price chart below, which immediately broke to the downside. Note how the beginning of a major session such as the New York session can often be a great time to enter trades in major currency pairs which involved the U.S. Dollar. This trade has given an acceptable maximum reward to risk ratio of more than 2 to 1 so far.

eurusd

EUR/JPY

We had expected the level at 120.64 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work very well. The H1 chart below shows how just before last Tuesday’s New York open, the price failed to break above that level very clearly, forming first a bearish pin candlestick followed by a bearish inside candlestick which was also more or less a pin candlestick, marked by the down arrow in the price chart below, which immediately broke to the downside. Note how the beginning of a major session such as the New York session can often be a great time to enter trades in major currency crosses. This trade has given a great maximum reward to risk ratio of more than 5 to 1 so far.

eurjpy

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