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 2016
This month we forecasted that the highest-probability trade will be long USD/CAD. The performance so far is positive:
Weekly Forecast 20th November 2016
Two weeks ago, we made no forecast.
This week, we again make no forecast, as there were no strong counter-trend movements.
This week has been dominated by relative strength in the U.S. Dollar, and relative weakness in the Japanese Yen.
Volatility was considerably greater than it was before the U.S. Presidential Election, with 59% of the major and minor currency pairs changing in value by more than 1%. Volatility might well begin to fall over this coming week, at least with the exception of the release of the FOMC Meeting Minutes release which could spark a lot of market activity.
You can trade our forecasts in a real or demo Forex brokerage account.
Key Support/Resistance Levels for Popular Pairs
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.