Trading Support and Resistance - Sunday, April 29

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’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 / May 2018

This month, we forecast that the best trades would be long EUR/USD and long GBP/USD. The performance so far is as follows:

For the month of May, we forecast that the best trade will be long USD/SEK.

Weekly Forecast April 29 2018

Last week, we forecast that the GBP/SEK currency cross would rise in value. It did rise, closing up by 0.78%.

This week, we make no forecast, as there were no strong weekly counter-trend movements in the Forex market.

This week has been dominated by relative strength in the U.S. Dollar, and relative weakness in the New Zealand Dollar.

Volatility was less than it was last week, with approximately 30% of the major or minor currency pairs changing in value by more than 1%. Volatility is likely to be higher next week. 

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 should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts: