Trading Support and Resistance

Christopher Lewis

Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of May 16, 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 May 2022

For the month of May, I forecasted that the US Dollar Index (USDX) would rise in value. So far, it has risen by 0.79% this month to date.

Weekly Forecast 15th May 2022

Last week, I made no weekly forecast as there were no unusually strong counter-trend price movements in the Forex market over the previous week. I again make no forecast this week.

The Forex market saw its level of directional volatility rise slightly last week, with 51% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to remain the same over this coming week.

Last week was dominated by relative strength in the Japanese Yen, and relative weakness in the Australian and New Zealand Dollars, and the Euro.

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: 0.6904, 0.6866, 0.6774, 0.6683 Resistance: 0.7059, 0.7125, 0.7180, 0.7227
EUR/USD
Support: 1.0444, 1.0427, 1.0372, 1.0350 Resistance: 1.0425, 1.0444, 1.0591, 1.0604
GBP/USD
Support: 1.2226, 1.2139, 1.1976, 1.1900 Resistance: 1.2277, 1.2406, 1.2500, 1.2624
USD/JPY
Support: 130.01, 129.83, 129.55, 128.59 Resistance: 129.45, 130.01, 131.50, 132.00
AUD/JPY
Support: 89.09, 88.37, 86.55, 86.19 Resistance: 89.93, 90.32, 90.52, 91.99
EUR/JPY
Support: 134.35, 133.66, 132.35, 131.91 Resistance: 136.83, 138.26, 140.00, 140.67
USD/CAD
Support: 1.2869, 1.2794, 1.2778, 1.2684 Resistance: 1.2953, 1.2995, 1.3020, 1.3127
USD/CHF
Support: 0.9975, 0.9833, 0.9791, 0.9753 Resistance: 1.0050, 1.0111, 1.0139, 1.0211
Let us see how trading reversals from two of last week’s key levels could have worked out:

EUR/USD

I had expected the level at $1.0591 might function as resistance, as it had previously acted as both support and resistance. Note how suchflipping” levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with bearish price action which included a near inside bar during the New York session last Monday. The entry point is marked by the down arrow within the price chart below. This trade has been nicely profitable, achieving a maximum positive risk reward ratio just shy of 5 to 1 based upon the size of the entry candlestick structure.

EUR/USD Hourly Chart

GBP/USD

I had expected the level at $1.2406 might function as resistance, as it had previously acted as both support and resistance. Note how suchflipping” levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with a large engulfing candlestick during Monday’s London/New York overlap session, which is often a great time of day to be trading Forex. The entry point is marked by the down arrow within the price chart below. This trade has not been very profitable, achieving a maximum positive risk reward ratio of only 1.5 to 1 because the entry candlestick structure was so large (it had a range of approximately 100 pips). This is a good lesson as to how very large signal candlesticks should be treated with caution and can often be best traded by dropping down to a shorter time frame.

GBP/USD 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.

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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