Trading Support and Resistance

Adam Lemon

Get our trading strategies with our monthly & weekly forecasts of currency pairs worth watching using support & resistance for the week of December 14, 2020.

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 18 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let us 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 & Interest Rates

Monthly Forecast December 2020

For the month of December, we forecasted that the EUR/USD currency pair would be likely to rise in value. Its performance so far this month is as follows:

EUR/USD
Weekly Forecast 13th December 2020

Last week, we make no weekly forecast, as there were no unusually strong counter-trend movements over the previous week.

This week, we forecast that the GBP/USD currency pair is likely to rise in value, due to its unusually sharp bearish retracement within a long-term bullish trend last week.

The Forex market showed a higher level of volatility compared to the previous week, with approximately 40% 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 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.

Key Support & Resistance Levels

Let us see how trading reversals from one of last week’s key levels would have worked out:

EUR/USD

We had expected the level at 1.2087 might act as support, 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 with a large bullish pin candlestick early during last Monday’s London session, which is typically a good time to be trading major Forex currency pairs such as this one. This trade was profitable, achieving a maximum positive reward to risk ratio of about 3 to 1 based upon the size of the entry candlestick.

EUR/USD

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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