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 16 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 us 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 September 2020
For the month of September, we forecasted again that the EUR/USD currency pair was likely to see a further rise in price. The September performance to date is negative so far, as shown below:
Weekly Forecast 21st September 2020
Last week, we made no weekly forecast.
This week, we forecast that the EUR/JPY currency cross is likely to rise in value over the week.
The Forex market showed an increase in volatility compared to the previous week, with 44% of the important currency pairs and crosses moving by more than 1% in value last week. Volatility is likely to be similar this week
Last week was dominated by relative strength in the Japanese Yen and relative weakness in the Australian Dollar.
You can trade our forecasts in a real or demo Forex brokerage account.
Previous Monthly Forecasts
You can view the results of our previous monthly forecasts here.
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 can be watched on the more popular currency pairs this week.
Let us see how trading a reversal from one of last week’s key levels would have worked out:
EUR/USD
We had expected the level at 1.1745 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price rejected this level with a strong bullish V-shaped rejection, turning decisively bullish when a strongly bullish inside candlestick broke up right away at the up arrow shown in the price chart below. This trade was nicely profitable, achieving a maximum positive reward to risk ratio so far of more than 4 to 1 based upon the size of the entry candlestick structure.
That is all for this week. 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.