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 March 22, 2021.

This week we will 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 and Interest Rates

Monthly Forecast March 2021

For the month of March, we forecast that the USD/JPY currency pair will rise in value, while the EUR/USD currency pair will fall. The performance so far has been positive:

Monthly Forecast March 2021

Weekly Forecast 21st March 2021

This week, we make no weekly forecast, as there were no strong counter-trend movements in the Forex market whatsoever last week.

The Forex market showed a very low level of volatility last week, with not one of the important currency pairs and crosses moving by more than 1% in value. Volatility is likely to remain relatively low over the coming week.

Last week was dominated by relative strength in the Swiss franc, and relative weakness in the euro, but the absolute values were so small as to make this somewhat meaningless.

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

AUD/USD

We had expected the level at 0.7774 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 with a bearish engulfing candlestick structure early in last Monday’s Asian session, marked by the down arrow in the price chart below, which is typically a good time to be trading currency pairs of pairs such as this one which include Asian currencies such as the Australian Dollar. This trade was profitable, achieving a maximum positive reward to risk ratio of more than 2 to 1 based upon the size of the entry candlestick.

AUD/USD hourly chart

USD/JPY

We had expected the level at 108.83 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 bullish inside candlestick early in last Tuesday’s New York session, marked by the up arrow in the price chart below, which is typically a good time to be trading major currency pairs such as this one. This trade has been very profitable, achieving a maximum positive reward to risk ratio of more than 1 to 1 based upon the size of the entry candlestick structure.

USD/JPY daily chart

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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