Trading Support And Resistance - Sunday, March 22

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 March 2020

For the month of March, we forecast that the best trade would be short AUD/JPY. The performance to date has been extremely profitable, as follows:

Weekly Forecast March 22

Last week, we made no weekly forecast. We again make no forecast this week, as there were again no strong counter-trend price movements.

The Forex market is showing a similar level of price activity compared to the previous week, with 81% of the important currency pairs and crosses moving by more than 1% in value over the past week. This high level has not been seen for more than 11 years. Volatility is likely to remain very high over the coming weeks as the world grapples with the coronavirus pandemic.

Last week was dominated by relative strength in the U.S. Dollar, and relative weakness in the Australian Dollar and the British Pound.

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. However, they should be used with great caution due to the very high level of fear and volatility in markets right now. Levels are likely to be most reliable at the end of very large directional movements, and mostly will be unlikely to hold.