Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of October 25, 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 20 years of Forex prices, which show that the following methodologies have all produced profitable results:
Trading the two currencies that are trending the most strongly over the past 3 months.
Assuming that trends are usually ready to reverse after 12 months.
Trading against very strong weekly counter-trend movements by currency pairs made during the previous week.
Carry Trade: Buying currencies with high interest rates and selling currencies with low interest rates.
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:
Monthly Forecast October 2021
For the month of October, we forecasted that the EUR/USD currency pair would fall in value. The result so far is shown below:
Interest Rate Differential
Performance to Date
+0.25% (0.25% - 0.00%)
Weekly Forecast 24th October 2021
Last week, we made no weekly forecast, as there were no unusually strong counter-trend movements last week. We again make no weekly forecast this week, as there were again no strong moves to fade, which is the basis of our weekly trading strategy.
The Forex market saw a decreased level of volatility last week, with only 4% of all the important currency pairs or crosses moving by more than 1% in value. Volatility is likely to increase dramatically next week as there are three major central banks giving their monthly policy releases: the European Central Bank, the Bank of Japan, and the Bank of Canada.
Last week was dominated by relative strength in the New Zealand dollar, and relative weakness in the British pound.
You can trade our forecasts in a real or demo Forex brokerage account.
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
Support: 0.7437, 0.7408, 0.7366, 0.7328
Resistance: 0.7509, 0.7524, 0.7548, 0.7569
Support: 1.1622, 1.1609, 1.1567, 1.1536
Resistance: 1.1668, 1.1688, 1.1710, 1.1753
Support: 1.3741, 1.3654, 1.3574, 1.3527
Resistance: 1.3773, 1.3852, 1.3898, 1.3950
Support: 113.03, 111.55, 111.23, 111.06
Resistance: 114.21, 114.46, 115.45, 116.29
Support: 84.61, 84.14, 83.79, 83.02
Resistance: 84.92, 85.56, 87.46, 88.43
Support: 131.48, 130.74, 130.48, 130.03
Resistance: 132.93, 133.63, 134.16, 134.88
Support: 1.2361, 1.2250, 1.2219, 1.2131
Resistance: 1.2385, 1.2424, 1.2499, 1.2563
Support: 0.9150, 0.9118, 0.9072, 0.9000
Resistance: 0.9176, 0.9248, 0.9270, 0.9331
Let us see how trading reversals from one of last week’s key levels would have worked out:
We had expected the level at 1.1668 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 action rejected this level with a bearish inside bar during last Tuesday’s London session just before the London/New York overlap (typically one of the best times to trade major currency pairs like this one) marked by the down arrow in the price chart below. This trade has been profitable, achieving a maximum positive reward to risk reward ratio slightly greater than 2 to 1 based upon the size of the entry candlestick structure.
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.