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

I made no forecast for the month of November, as I thought markets had become too unsettled to look beyond the next few days. 

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 November 2022

I made no forecast for the month of November, as I thought markets had become too unsettled to look beyond the next few days. I think this has proven to be a good call as direction in the Forex market has become uncertain over recent days.

Weekly Forecast 20th November 2022

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

The Forex market saw a strong decrease in directional volatility last week, with only 41% of the most important currency pairs and crosses moving by more than 1% in value. Directional volatility is likely to remain relatively low or even fall further over the coming week.

Last week was dominated by relative strength in the New Zealand Dollar, and relative weakness in the Swiss Franc.

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 two of these key pairs last week off key support and resistance levels could have worked out:

EUR/USD

I had expected the level at $1.0281 might act as support 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 right at the start of last Monday’s New York session (which can often be a great time to enter Forex trades) with a bullish outside candlestick, marked by the up arrow signaling the timing of this bullish rejection. This trade has been profitable, achieving a maximum positive reward to risk ratio of more than 2 to 1 so far based upon the size of the entry candlestick.

EUR/USD Hourly Price Chart

GBP/USD

I had expected the level at $1.1721 might act as support in the GBP/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 right at the close of last Monday’s London session (which can often be a great time to enter Forex trades in the British Pound) with a bullish doji candlestick, marked by the up arrow signaling the timing of this bullish rejection. This trade has been profitable, achieving a maximum positive reward to risk ratio of more than 4 to 1 so far based upon the size of the entry candlestick structure.

GBP/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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