This week we will 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 18 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 April 2021

For the month of April, we again forecast that the USD/JPY currency pair will rise in value, while the EUR/USD currency pair will fall. The performance so far is negative:

Weekly Forecast April 25

Last week, we made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market. This week, we again make no forecast.

The Forex market showed another decrease in its level of volatility last week, with not one of the important currency pairs and crosses moving by more than 1% in value. Volatility is likely to rise over the coming week.

Last week was dominated by relative strength in the euro, and relative weakness in the U.S. 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.

Let us see how trading reversals from one of last week’s key levels would have worked out:

EUR/USD

We had expected the level at 1.1943 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price rejected this level with a bullish inside candlestick which early during last Monday’s New York session, marked by the up arrow in the price chart below. This trade has been very profitable, achieving a maximum positive reward to risk ratio so far of more than 9 to 1 based upon the size of the entry candlestick structure.