Image Source: Pixabay

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 forecast that the EUR/USD and GBP/USD currency pairs will rise in value. I made no forecast for the month of March, as the Forex market was so unsettled and volatile.

Weekly Forecast for Sunday, April 2, 2023

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

Directional volatility in the Forex market is likely to remain the same or even increase by a little over the coming week, as there are several high-impact data releases scheduled. Last week was dominated by relative strength in the Canadian dollar, and relative weakness was seen in the Japanese yen.

Key Support/Resistance Levels for Popular Pairs

I often teach that trades should be entered and exited at or 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 one 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 JPY130.43 might act as support in the USD/JPY currency pair last week, as it had previously acted 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 right at the start of last Tuesday’s New York session (which can be a great time to enter trades in major currency pairs like this one) with a large engulfing candlestick, marked by the upward arrow, signaling the timing of this bullish rejection. This trade was profitable, giving a maximum reward-to-risk ratio of more than 3 to 1 based upon the size of the entry candlestick structure.

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