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:
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Monthly Forecast January 2016
This month, we forecasted that the USD will rise against the GBP, CHF and CAD, suggesting long USD/CHF and USD/CAD and short GBP/USD trades. The performance of the forecast overall so far has been extremely positive:
Weekly Forecast 17th 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 was similar to last week. We saw strength in the safety currencies such as the USD and JPY, and also in the EUR and CHF. All the other major currencies were very weak, especially the commodity currencies of CAD and AUD, and also the GBP. There is a strongly “risk off” global environment and stock markets and material commodities are falling sharply.
Volatility was a little lower compared to the previous week, but still relatively heavy. Approximately 50% of the major and minor currency pairs changed in value by more than 1%. In fact it was the most volatile week overall in recent months. Volatility is likely to continue this week, as there is more economic data due.
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.