This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 11 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 3 months.
* Assuming that trends are usually ready to reverse after 12 months.
* Trading against very strong counter-trend movements by currency pairs made during the previous week.
* Buying currencies with high interest rates and selling currencies with low interest rates.
Let’s take a 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 October 2015
This month we forecast that the most probable movement is short AUD/JPY. The performance so far has been very negative and is shown below:
Currency Pair | Forecast Direction | Interest Rate Differential | Performance to Date |
AUD/JPY | Short ↓ | -1.90% (0.10% - 2.00%) | -4.29% |
Weekly Forecast 25th October 2015
There was no forecast last week.
This week, we forecast that the EUR/AUD cross will rise in value.
This week saw continuing great strength in the NZD, and also strength in the USD. The weakest currencies are the CHF, GBP and CAD.
Volatility was high than the previous week. About half of the major and minor currency pairs changed in value by more than 1%. Volatility is likely to be higher this this week as there are central bank events scheduled for the USD, JPY and the NZD.
You can trade our forecasts in a real or demo Forex brokerage account.
Key Support/Resistance Levels for Popular Pairs
At the FX Academy, we 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 should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:
Currency Pair | Key Support / Resistance Levels |
AUD/USD | Support: 0.7200, 0.7166, 0.7143 Resistance: 0.7293, 0.7442, 0.7476, 0.7552 |
EUR/USD | Support: 1.0931, 1.0868, 1.0847 Resistance: 1.1136, 1.1233, 1.1315 |
GBP/USD | Support: 1.5078, 1.4971 Resistance: 1.5381, 1.5557, 1.5665 |
USD/JPY | Support: 120.27, 120.08, 118.00 Resistance: 121.80, 123.00, 123.77 |
AUD/JPY | Support: 86.00, 84.97, 83.00 Resistance: 88.52, 91.00 |
EUR/JPY | Support: 133.50 Resistance: 134.75 |
USD/CAD | Support: 1.3064, 1.2946, 1.2800 Resistance: 1.3202, 1.3305, 1.3370 |
USD/CHF | Support: 0.9648 Resistance: 0.9900 |
Let’s see how trading one of these key pairs last week off key support and resistance levels could have worked out:
AUD/USD
We had expected the level at 0.7200 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work really well. The H4 chart below shows how the price just could not get
below this level, before it finally moved up with some momentum following a bullish outside candle marked by the up arrow in the chart below. This trade did not produce the highest reward to risk ratio of profit, but it had a clear target at the trend lines above.
You can trade our forecasts in a real or demo Forex brokerage account to test the strategies and strengthen your self-confidence before investing real funds.