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:
Monthly Forecast June 2022
For the month of June, I forecasted that the US Dollar Index would rise in value. Since I made the forecast two weeks ago, it has decreased in value by 0.26%.
Weekly Forecast 19th June 2022
Last week, I forecasted that the CAD/CHF currency cross was likely to increase in value. In fact, it decreased in value by 0.16%.
This week, I make no weekly forecast as last week saw no major counter-trend price movements over the week.
The Forex market saw its level of directional volatility fall again last week, with only 15% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease even more over this coming week as there are so few major data releases scheduled.
Last week was dominated by relative strength in the Canadian Dollar, and relative weakness in the US 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.
Currency Pair | Key Support / Resistance Levels |
AUD/USD | Support: 0.6848, 0.6774, 0.6683, 0.6570 Resistance: 0.6999, 0.7038, 0.7063, 0.7137 |
EUR/USD | Support: 1.0457, 1.0432, 1.0350, 1.0300 Resistance: 1.0601, 1.0645, 1.0672, 1.0760 |
GBP/USD | Support: 1.2161, 1.2043, 1.1976, 1.1901 Resistance: 1.2338, 1.2386, 1.2412, 1.2437 |
USD/JPY | Support: 134.23, 132.27, 131.00, 130.21 Resistance: 135.86, 137.00, 137.50, 138.00 |
AUD/JPY | Support: 92.72, 92.00, 90.58, 90.30 Resistance: 95.00, 95.23, 95.54, 96.16 |
EUR/JPY | Support: 142.12, 141.20, 140.67, 140.00 Resistance: 142.76, 143.66, 145.00, 145.50 |
USD/CAD | Support: 1.2869, 1.2805, 1.2684, 1.2619 Resistance: 1.2936, 1.2954, 1.3025, 1.3127 |
USD/CHF | Support: 0.9545, 0.9498, 0.9438, 0.9381 Resistance: 0.9592, 0.9633, 0.9728, 0.9833 |
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 $1.0601 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 inside bar during last Wednesday’s London/New York overlap, which is typically a great time to be trading Forex. The entry point is marked by the down arrow within the price chart below. This trade has been profitable so far, achieving a maximum positive risk-reward ratio slightly higher than 3 to 1 based upon the size of the entry candlestick structure.
EUR/USD Hourly Chart
USD/CHF
I had expected the level at 0.9545 might function as support, as it had previously functioned as both support and resistance. Note how such “flipping” levels can be exceptionally reliable reversal points. The H1 chart below shows how the price rejected this level with a very clear bullish reversal – firstly a doji, then a pin bar - during last Friday’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.
USD/CHF 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.