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 July 12, 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 July 2021

For the month of July, we forecasted that the EUR/USD currency pair will fall in value, while the USD/JPY currency pair will rise in value. The performance to date is shown below:

Monthly Forecast July 2021

Weekly Forecast 11th July 2021

Last week, we made no weekly forecast, as there were no large counter-trend price movements in any important currency pairs or crosses.

We again make no forecast this week.

The Forex market saw its level of volatility rise last week, with 30% of all the important currency pairs or crosses moving by more than 1% in value. Volatility is likely to increase again over the coming week.

Last week was dominated by relative strength in the Japanese yen, and relative weakness in the Canadian 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 us see how trading reversals from one of last week’s key levels would have worked out:

EUR/JPY

We had expected the level at 129.67 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 towards the end of last Thursday’s Asian session (typically a great time to be trading currency pairs with a major Asian currency component such as the EUR/JPY cross), marked by the up arrow in the price chart below. This trade has been nice profitable due to the relatively strong bullish price reversal seen towards the end of last week, achieving a maximum positive reward to risk ratio of more than 3 to 1 based upon the size of the entry candlestick structure.

EUR/JPY Hourly Chart

 

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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