Trading Support and Resistance - Sunday, June 7

For the month of June, we forecasted that the best trade would be long EUR/USD. The performance so far has been positive. (FXE) (UUP) (UDN)

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 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 June 2020

For the month of June, we forecasted that the best trade would be long EUR/USD. The performance so far has been positive, as shown in the table below:

Weekly Forecast 7th June 2020

Last week, we made no forecast as there were no strong counter-trend movements sharply against any dominant trends over the past week.

This week, we again make no forecast.

The Forex market showed a sharp rise in volatility compared to the previous week, with 74% of the important currency pairs and crosses moving by more than 1% in value last week. Volatility is likely to remain at a similar level over the coming week.

Last week was dominated by relative strength in the Australian Dollar (FXA), and relative weakness in the Japanese Yen (FXY).