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 June, I forecast that the US Dollar Index would rise in value. Since I made the forecast last week, it has increased in value by 0.33%.
Weekly Forecast June 19th, 2022
I made no weekly forecast in my previous piece last week.
This week, I forecast that the CAD/CHF currency cross is likely to increase in value.
The Forex market saw its level of directional volatility rise again last week, with 52% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease over this coming week.
Last week was dominated by relative strength in the Swiss Franc, and relative weakness in the Canadian Dollar.
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 reversals from one of last week’s key levels could have worked out:
AUD/JPY
I had expected the level at 91.99 might function as support, 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 bullish engulfing candlestick during last Thursday’s London/New York overlap, which is typically a great time to be trading Forex. The entry point is marked by the up arrow within the price chart below. This trade has been profitable so far, achieving a maximum positive risk-reward ratio slightly higher than 1 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.