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 May 17, 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 May 2021

For the month of May, we forecasted that the USD/CAD currency pair would fall in value, and the CAD/JPY currency cross would rise in value. The performance so far has been positive:

Monthly Forecast May 2021

Weekly Forecast 16th May 2021

Last week, we made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market. This week, we again make no forecast.

The Forex market showed a reduced level of volatility last week, with 19% of the important currency pairs and crosses again 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 British pound, 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 us see how trading reversals from one of last week’s key levels would have worked out:

AUD/USD

We had expected the level at 0.7696 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 pin bar just at the open of last Thursday’s London session, marked by the up arrow in the price chart below, which is typically a good time to be trading major pairs involving the U.S. dollar such as this one in the Forex market. This trade has been nicely profitable, achieving an excellent maximum positive reward to risk ratio so far of more than 4 to 1 based upon the size of the entry candlestick.

AUD/USD Hourly 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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