Trading Support and Resistance – EUR/USD, GBP/USD, USD/JPY

Adam Lemon

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. This week, I again make no forecast.

This week I will begin with my monthly and weekly Forex forecast 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 September 2022

For the month of September, I forecasted that the EUR/USD currency pair and the GBP/USD currency pair would decline in value, while the USD/JPY currency pair would increase in value. The results so far are shown below:

September 2022 Forex Forecast Performance

Weekly Forecast 18th September 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. This week, I again make no forecast.

The Forex market saw an increase in directional volatility last week, with 55% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to increase even more over this coming week as there are several major central bank releases due.

Last week was dominated by relative strength in the US Dollar, and relative weakness in the British Pound and the Canadian / Australian / New Zealand Dollars.

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.

Key Support and Resistance Levels

Let us see how trading one of these key pairs last week off key support and resistance levels could have worked out:

EUR/USD

We had expected the level at $1.0195 might act as resistance in the EUR/USD currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 price chart below shows how the price rejected this level at the start of last Monday’s London session with a bearish inside candlestick, marked by the down arrow signaling the timing of the bearish rejection. This is typically a great time of day to be entering trades in major Forex currency pairs especially anything involving an European currency such as the Euro. This trade has been nicely profitable, achieving a maximum positive reward to risk ratio of more than 6 to 1 based upon the size of the entry candlestick structure.

EUR/USD Hourly Price Chart

Ready to trade our Forex weekly forecast? Here’s a list of some of the best Forex trading platforms to check out.

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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