Trading Support and Resistance

Adam Lemon

Volatility is likely to remain over the coming week.

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 July 2020

For the month of July, we made no forecast.

Weekly Forecast 12th July 2020 

Last week, we made 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 decrease in volatility compared to the previous week, with only 11% of the important currency pairs and crosses moving by more than 1% in value last week. Volatility is likely to remain over the coming week.

Last week was dominated by relative strength in New Zealand, and relative weakness in the Australian Dollar.

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

GBP/USD

We had expected the level at 1.2670 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 near the start of last Thursday’s New York session, with this New York/London overlap, it is typically a great time to be trading major currency pairs such as the GBP/USD, turning decisively bearish with a bearish doji candlestick breaking down right away at the down arrow shown in the price chart below. This trade has been profitable, achieving a maximum positive reward to risk ratio of more than 3 to 1 so far based upon the size of the entry candlestick structure.

GBP/USD Hourly Price Chart for 3rd to 13th July 2020

Advertisement
Take advantage of record-breaking volatility in the British Pound

Trade GBP/USD now!

USD/CAD

We had expected the level at 1.3624 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 near the start of last Wednesday’s London session, typically a great time to be looking for price reversals in the Forex market, turning decisively bearish with a bearish pin candlestick breaking down right away at the down arrow shown in the price chart below. This trade was profitable, achieving a maximum positive reward to risk ratio of more than 5 to 1 based upon the size of the entry candlestick.

USD/CAD Hourly Price Chart for 3rd to 13th July 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

Did you like what you read? Let us know what you think!

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

0 User comments

exclamation mark

Please make sure your comments are appropriate and that they do not promote services or products, political parties, campaign material or ballot propositions. Comments that contain abusive, vulgar, offensive, threatening or harassing language, or personal attacks of any kind will be deleted. Comments including inappropriate will also be removed.

Read more
Add new comment
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.