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 December 2015
This month we forecast that the most probable movements are short GBP/USD and EUR/USD and long USD/CHF. The forecast has performed negatively so far, as shown below:
Weekly Forecast 3rd January 2016
Last week, we made no weekly forecasts.
This week, we again make no forecasts, as there were no strong counter-trend moves last week.
This week saw strength in the commodity currencies of NZD, AUD and CAD. The USD was the weakest currency.
Volatility was considerably than the previous week. Approximately 82% of the major and minor currency pairs changed in value by less than 1%. Volatility is likely to continue to be ow this week, as the Christmas and New Year holiday season continues.
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:
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.