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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 23, 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, so I once again give no weekly forecast this time.

Directional volatility in the Forex market will probably increase to some extent over the week, as there are more high-impact data releases scheduled in the coming days. Last week was dominated by relative strength in the US dollar, and relative weakness was seen in the Canadian dollar.

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/CHF

I had expected the level at $0.9000 might act as resistance in the USD/CHF 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 Wednesday’s London session (which can be a great time to enter trades in currency pairs involving European currencies) with an engulfing 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 more than 4 to 1 based upon the size of the entry candlestick.

USD/CAD

I had expected the level at $1.3407 might act as support in the USD/CAD currency pair last week, as it had similarly acted as both support and resistance previously. 

The H1 price chart below shows how the price rejected this level during last Monday’s London/New York session overlap with double inside bars, with the last bar a doji, marked by the downward arrow, signaling the timing of this bearish rejection. This trade reached a maximum reward-to-risk ratio a little higher than 1 to 1 based upon the size of the entry candlestick structure.

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