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Today, I will begin with my monthly and weekly forecasts of the currency pairs worth watching. The first part of my forecast is based upon 20 years' worth of research of Forex prices, which shows that the following methodologies have all produced profitable results:

• Trading the two currencies that are trending the most strongly over the past six months.
• Trading against very strong weekly counter-trend movements by currency pairs made during the previous week.
• Carry trade: 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 for April 2023

For the month of April, I forecasted that the EUR/USD and GBP/USD currency pairs would rise in value. The performance of my forecast so far this month is as follows:

Weekly Forecast for Sunday, April 16, 2023

Last week, I made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market. The situation remains the same at this time, so I once again give no weekly forecast.

Directional volatility in the Forex market is not likely to increase significantly over the coming week, as there are fewer high-impact data releases scheduled in the coming days. Last week was dominated by relative strength in the Canadian and Australian dollars, and relative weakness was seen in the Japanese yen.

Key Support/Resistance Levels for Popular Pairs

I 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 monitored on the more popular currency pairs this week.

Let's see how trading two of these key pairs last week off of key support and resistance levels could have worked out.

USD/JPY

I had expected the level at JPY133.84 might act as resistance in the USD/JPY currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well.

The H1 price chart below shows how the price rejected this level during last Monday’s New York session (which can be a great time to enter trades in major currency pairs like this one) with an inside bar, marked by the downward arrow, signaling the timing of this bearish rejection. This trade was profitable, giving a maximum reward-to-risk ratio of just over 3 to 1 based upon the size of the entry candlestick structure.

USD/CAD

I had expected the level at $1.3304 might act as support in the USD/CAD currency pair last week, as it had similarly acted previously as both support and resistance. The H1 price chart below shows how the price rejected this level right at the start of last Friday’s New York session with a large engulfing bar followed by an inside bar, marked by the upward arrow, signaling the timing of this bullish rejection. 

This trade, however, has not quite reached a maximum reward-to-risk ratio of even 1 to 1 based upon the size of the entry candlestick structure.

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