Trading Support and Resistance
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 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:
For the month of March, we forecasted that the best trade would be short AUD/JPY. The performance to date has been strongly profitable, as follows:
Weekly Forecast 15th March 2020
Last week, we made no weekly forecast. Although there have been very large counter-trend price movements, we again make no forecast this week, as we believe the nature of the fear behind the current high market volatility is unprecedented in living memory, so near-term price movement is more unpredictable than it was in previous high-volatility regimes.
The Forex market is showing much, much greater price activity compared to last week, with 85% of the important currency pairs and crosses moving by more than 1% in value over the past week. This high level has not been seen for more than 11 years. Volatility is likely to remain very high over the coming weeks as the world grapples with the coronavirus pandemic.
Last week was dominated by relative strength in the U.S. 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 can be watched on the more popular currency pairs this week. However, they should be used with great caution due to the very high level of fear and volatility in markets right now. Levels are likely to be most reliable at the end of very large directional movements, and mostly will be unlikely to hold.
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.