Trading Support and Resistance - 23 February 2020

Adam Lemon

Updated 25th February 2020 with new key support & resistance levels.

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:

Currency Price Changes and Interest Rates

Monthly Forecast February 2020

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

February Performance to Date

Weekly Forecast 23rd February 2020

Last week, we made no weekly forecast. As there were again no large counter-trend price movements, we again make no forecast this week.

The Forex market is showing slightly less price activity compared to last week, with 33% of the important currency pairs and crosses moving by more than 1% in value over the past week. Volatility is likely to remain at a similar level over the coming week.

Last week was dominated by relative strength in the Euro, 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:

Key Support Resistance Levels

Let’s see how trading one of these key pairs last week off key support and resistance levels could have worked out:

USD/CAD

We had expected the level at 1.3278 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 near the beginning of last Tuesday’s New York session, the price bounced strongly off that level, forming a bearish combined candlestick “V” formation marked by the down arrow in the price chart below, which immediately broke to the downside. This trade has given a maximum reward to risk ratio so far of a little more than 2 to 1.

USD/CAD

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

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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