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 10, 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 our 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 9th 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 a decrease in its level of directional volatility last week, due to the complete lack of any high-impact data releases, with only 22% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to increase this week as we move deeper into the New Year and get US CPI (inflation) data.

Last week was dominated by relative strength in the British pound, and relative weakness in the Australian dollar.

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.

Currency Pair

Key Support / Resistance Levels

AUD/USD

Support: 0.7123, 0.7102, 0.7083, 0.7051

Resistance: 0.7187, 0.7223, 0.7302, 0.7321

EUR/USD

Support: 1.1323, 1.1261, 1.1250, 1.1229

Resistance: 1.1366, 1.1394, 1.1456, 1.1514

GBP/USD

Support: 1.3483, 1.3375, 1.3340, 1.3304

Resistance: 1.3606, 1.3638, 1.3709, 1.3769

USD/JPY

Support: 115.02, 114.53, 113.95, 113.07

Resistance: 116.00, 116.29, 116.79, 119.04

AUD/JPY

Support: 81.30, 81.05, 80.40, 79.81

Resistance: 83.19, 83.80, 84.35, 84.83

EUR/JPY

Support: 130.64, 130.51, 129.94, 128.97

Resistance: 131.78, 132.00, 132.93, 133.63

USD/CAD

Support: 1.2611, 1.2571, 1.2499, 1.2480

Resistance: 1.2738, 1.2812, 1.2901, 1.2959

USD/CHF

Support: 0.9170, 0.9072, 0.9000, 0.8969

Resistance: 0.9200, 0.9229, 0.9271, 0.9370

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

USD/JPY

We had expected the level at 115.02 might function 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 started Monday’s New York session immediately with a large bullish hourly candlestick, typically a great time to enter new trades in major currency pairs, marked by the up arrow in the price chart below as it rose from the support level. This trade was nicely profitable, achieving a maximum positive reward to risk ratio so far of more than 4 to 1 based upon the size of the entry candlestick.\

USD/JPY Hourly Chart

USD/CAD

We had expected the level at 1.2812 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 a quite large doji candlestick just after the start of last Thursday’s London session, often a good time to enter a new trade in a major Forex currency pair involving the US dollar, 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 6 to 1 based upon the size of the entry candlestick.

USD/CAD Hourly ChartThat 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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