Trading Support and Resistance

Adam Lemon

Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of January 24, 2022.

This week I will begin with my monthly and weekly forecasts of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 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 January 2022

For the month of January, I made no forecast.

Weekly Forecast 23rd January 2022

In my previous forecast last week, I made no weekly forecast, as there were no unusually strong counter-trend movements. Fading strong weekly counter-trend price movements is the basis of my weekly trading strategy.

I again make no weekly forecast, as there were no strong counter-trend price movements last week in the Forex market.

The Forex market saw an increase in its level of directional volatility last week, as I expected, with 30% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to increase this week as the US FOMC will be reporting which is usually the major event in the Forex market each month.

Last week was dominated by relative strength in the Japanese yen, and relative weakness in the New Zealand dollar.

You can trade our forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

I 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.

Currency Pair
Key Support/Resistance 
AUD/USD

Support: 0.7123, 0.7102, 0.7083, 0.7051

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 Resistance: 0.7293, 0.7321, 0.7344, 0.7390

EUR/USD
Support: 1.1261, 1.1250, 1.1229, 1.1195
Resistance: 1.1366, 1.1387, 1.1435, 1.1451
GBP/USD
Support: 1.3483, 1.3375, 1.3340, 1.3304
Resistance: 1.3576, 1.3602, 1.3664, 1.3769
USD/JPY
Support: 1.3483, 1.3375, 1.3340, 1.3304
Resistance: 114.23, 114.55, 115.02, 116.00

 

AUD/JPY

 
Support: 81.30, 81.05, 80.40, 79.81
Resistance: 82.08, 83.00, 83.75, 84.35
EUR/JPY
Support: 128.53, 128.30, 127.44, 126.88
Resistance: 130.00, 130.62, 130.84, 131.78
USD/CAD
Support: 1.2535, 1.2498, 1.2372, 1.2250
Resistance: 1.2611, 1.2738, 1.2812, 1.2901

USD/CHF

Support: 0.9072, 0.9000, 0.8969, 0.8943

Resistance: 0.9140, 0.9200, 0.9229, 0.9249

Let us see how trading reversals from one of last week’s key levels could have worked out:

USD/JPY

I had expected the level at 115.02 might function 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 an inside bar towards the end of last Tuesday’s Tokyo session, often a good time to enter a new trade in a Forex currency pair or cross involving the Japanese Yen, marked by the down arrow in the price chart below. This trade has been nicely profitable, achieving a maximum positive risk reward ratio of more than 4 to 1 based upon the size of the entry candlestick structure.

USD/JPY Hourly Chart

That is all for this week. You can trade my 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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