Trading Support and Resistance

Adam Lemon

For the month of June, we forecasted that the best trade would be long EUR/USD. The performance so far has been positive

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:

June 2020 Performance to Date

Monthly Forecast June 2020

For the month of June, we forecasted that the best trade would be long EUR/USD. The performance so far has been positive, as shown in the table below:

June 2020 Performance to Date

Weekly Forecast 7th June 2020

Last week, we make no forecast as there were no strong counter-trend movements sharply against any dominant trends over the past week.

This week, we again make no forecast.

The Forex market showed a sharp rise in volatility compared to the previous week, with 74% of the important currency pairs and crosses moving by more than 1% in value last week. Volatility is likely to remain at a similar level over the coming week.

Last week was dominated by relative strength in the Australian Dollar, 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 can be watched on the more popular currency pairs this week.

Key Support and Resistance Levels

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

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EUR/USD

We had expected the level at 1.1381 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 how the price rejected this level right at the start of last Friday’s London session, turning bearish with a doji candlestick breaking down at the down arrow signaling the timing of the turn. This trade has been profitable, achieving a maximum positive reward to risk ratio of approximately 3 to 1 so far based upon the size of the entry candlestick.

EUR/USD Hourly Price Chart for 31st May / 5th June 2020

That is 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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