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 April 2016
This month, we forecasted that the AUD, CAD and EUR would rise in value against the USD. The results so far are as follows:
Weekly Forecast 10th April 2016
Last week, we made no forecast.
This week, we make no forecast, as there were no strong counter-trend moves over this past week.
This week has seen strength in the Japanese Yen and Swiss Franc, and weakness primarily in the New Zealand, Australian and U.S. Dollars, and also the British Pound.
Volatility was slightly less than the previous week, with about 55% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be the same or even higher this coming week.
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 one of these key pairs last week off key support and resistance levels could have worked out:
EUR/USD
We had expected the level at 1.1337 might act as support, 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 during last week this level acted as very reliable support, holding the price and giving three different opportunities to enter long trades, marked by the up arrows in the chart below. The last two trades would still be open, and the second trade could have made a maximum profit of almost 100 pips, a reward to risk ratio of more than 3 to 1.
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.