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 November 2015
This month we forecast that the most probable movements are short AUD/JPY and AUD/NZD. This forecast has performed negatively so far, as shown below:
Weekly Forecast 15th November 2015
Last week, we forecasted that the AUD/NZD pair would fall in value. In fact it rose in value by 0.76%.
This week, we make no forecast, as there were no strong counter-trend movements.
This week saw strength in the GBP and AUD, and the greatest relative weaknesses was in the CHF.
Volatility was lower than the previous week. Approximately 85% of the major and minor currency pairs changed in value by less than 1%. Volatility is likely to be higher this this week as there are central bank events scheduled for the USD, JPY and AUD.
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:
|
Let’s see how trading two of these key pairs last week off key support and resistance levels could have worked out:
USD/CHF
We had expected the zone from 1.0089 to 1.0123 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work really well. The H1 chart below shows how the price rose to reach levels very close to this zone twice, before finally hitting it during Friday’s New York session and forming a bearish outside doji candle marked by the downwards arrow. It would have been a profitable trade so far, and could be running now at a profit of approximately 30 pips.
EUR/USD
We had expected the level at 1.0684 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 fell to an area below the support during Tuesday’s London/New York session overlap, rejecting it and forming a bullish pin candle marked by the upwards arrow. It could have been a very nicely profitable trade with a good reward to risk profile, reaching a maximum of more than 100 pips of profit.
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.