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 August 2, 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 August 2021

For the month of August, we make no forecast as there are no clear trends in the Forex market showing very strong momentum.

For the month of July, we forecasted that the EUR/USD currency pair would fall in value, while the USD/JPY currency pair would rise in value. The final performance was negative and is shown below:

Weekly Forecast July 2021

Weekly Forecast 1st August 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 a higher but still relatively low level of volatility last week, with only 23% of all the important currency pairs or crosses moving by more than 1% in value. Volatility is likely to remain about the same over the coming week.

Last week was dominated by relative strength in the Swiss franc, 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 us see how trading reversals from two of last week’s key levels could have worked out:

AUD/USD

We had expected the level at 0.7403 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 inside candlestick near the start of last Thursday’s London session, typically a great time to enter new trades in major currency pairs, marked by the down arrow in the price chart below. This trade has been nicely profitable, achieving a maximum positive reward to risk ratio of more than 3 to 1 based upon the size of the entry candlestick structure.

AUD/USD Hourly Chart

USD/CAD

We had expected the level at 1.2601 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 inside candlestick near the end of last Tuesday’s New York session, often a good time to enter a new trade in a major north American currency pair such as the USD/CAD, marked by the down arrow in the price chart below. This trade has been very profitable so far, achieving a maximum positive reward to risk ratio of more than 13 to 1 based upon the size of the entry candlestick structure.

USD/CAD 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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