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 forecast 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 September 27
Last week, we forecast that the EUR/JPY currency cross was likely to rise in value over the week. In fact, it fell by 0.82%.
This week, we forecast that the AUD/JPY currency cross and AUD/USD currency pair are both likely to rise in value over the coming week.
The Forex market showed an increase in volatility compared to the previous week, with 57% 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 U.S. Dollar, and relative weakness in the Australian Dollar.
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.
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