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:
- Trading the two currencies that are trending the most strongly over the past 6 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 March 2022
For the month of March, I forecasted last week that the EUR/USD currency pair would fall in value. Its final performance is shown below.
Currency Pair | Forecast Direction | Interest Rate Differential | Final Performance |
EUR/USD | Short ↓ | +0.50% (0.50% - 0.00%) | -1.08% |
Monthly Forecast April 2022
For the month of April, I forecast that the US Dollar Index (USDX) will rise in value.
Weekly Forecast 3rd April 2022
Last week, I made no weekly forecast, as there were no strong counter-trend price movements in the Forex market.
This week I forecast that the EUR/NOK currency cross will be likely to fall in value.
The Forex market saw its level of directional volatility decrease significantly last week, with only 19% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to remain low over this coming week, as markets seem to have shifted into a more risk-on mode, and because there are few high-impact data releases scheduled.
Last week was dominated by relative strength in the Euro, and relative weakness in the British Pound.
You can trade my 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 Levels |
AUD/USD | Support: 0.7454, 0.7430, 0.7321, 0.7275 Resistance: 0.7534, 0.7548, 0.7569, 0.7636 |
EUR/USD | Support: 1.1025, 1.0956, 1.0710, 1.0639 Resistance: 1.1077, 1.1089, 1.1125, 1.1241 |
GBP/USD | Support: 1.3000, 1.2785, 1.2650, 1.2624 Resistance: 1.3181, 1.3236, 1.3316, 1.3357 |
USD/JPY | Support: 122.33, 121.36, 120.49, 120.00 Resistance: 123.12, 125.00, 125.28, 125.85 |
AUD/JPY | Support: 91.04, 90.52, 89.93, 89.69 Resistance: 93.12, 97.00, 97.30, 100.00 |
EUR/JPY | Support: 134.58, 133.76, 133.39, 132.35 Resistance: 136.31, 137.00, 138.96, 140.00 |
USD/CAD | Support: 1.2372, 1.2250, 1.2219, 1.2131 Resistance: 1.2553, 1.2582, 1.2651, 1.2675 |
USD/CHF | Support: 0.9224, 0.9072, 0.9000, 0.8969 Resistance: 0.9278, 0.9326, 0.9372, 0.9381 |
Let us see how trading reversals from two of last week’s key levels could have worked out:
USD/CHF
I had expected the level at 0.9372 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 two consecutive bearish pin bars at the start of last Monday’s London session, which is often a great time to enter trades in major currency pairs such as this one. The entry point is 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
I had expected the level at ¥125.00 might function as resistance, as it is a very big round number and psychological level, which was reached on very high volatility within a climaxing directional price movement. The H1 chart below shows how the price rejected this level with an inside bar not long after the start of last Monday’s London session, which is often a great time to enter trades in major currency pairs such as the USD/JPY. The entry point is marked by the down arrow in the price chart below. This trade has been, achieving a maximum positive risk reward ratio of more than 2 to 1 based upon the size of the entry candlestick structure.
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.