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:
Currency Price Changes and Interest Rates
Monthly Forecast June 2022
For the month of May, I forecasted that the US Dollar Index (USDX) would rise in value. Unfortunately, it fell during that month by 0.64%.
For the month of June, I forecast that the US Dollar Index will rise in value.
Weekly Forecast 12th June 2022
I made no weekly forecast in my previous piece two weeks ago.
I make no weekly forecast this week, as there were no unusually strong counter-trend price movements in the Forex market last week.
The Forex market saw its level of directional volatility rise last week, with 44% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease or remain the same over this coming week.
Last week was dominated by relative strength in the US Dollar, and relative weakness in the Japanese Yen.
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: 0.7125, 0.7038, 0.7008, 0.6996 Resistance: 0.7180, 0.7227, 0.7275, 0.7321 |
EUR/USD | Support: 1.0509, 1.0457, 1.0391, 1.0350 Resistance: 1.0540, 1.0645, 1.0672, 10760 |
GBP/USD | Support: 1.2277, 1.2217, 1.2139, 1.1976 Resistance: 1.2330, 1.2386, 1.2412, 1.2437 |
USD/JPY | Support: 133.29, 132.99, 130.84, 130.00 Resistance: 134.50, 135.00, 135.50, 136.00 |
AUD/JPY | Support: 94.59, 93.60, 92.94, 91.99 Resistance: 95.00, 95.54, 96.16, 96.39 |
EUR/JPY | Support: 140.67, 140.00, 138.26, 136.83 Resistance: 141.40, 142.12, 142.80, 143.62 |
USD/CAD | Support: 1.2684, 1.2619, 1.2587, 1.2382 Resistance: 1.2869, 1.2895, 1.2953, 1.2995 |
USD/CHF | Support: 0.9833, 0.9713, 0.9671, 0.9606 Resistance: 0.9983, 1.0035, 1.0111, 1.0139 |
Let us see how trading reversals from one of last week’s key levels could have worked out:Key Support and Resistance Levels
EUR/USD
I had expected the level at $1.0760 might function as resistance, as it had previously functioned as both support and resistance. Note how such “flipping” levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with a bearish pin bar right at the start of the New York session last Thursday, which is typically a great time to be trading Forex. Note also that the ECB was just giving a major policy release, and the rejection was also confluent with a descending trend line. The entry point is marked by the down arrow within the price chart below. This trade has been nicely profitable so far, achieving a maximum positive risk reward ratio slightly higher than 4 to 1 based upon the size of the entry candlestick.
EUR/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.