This week we’ll 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 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’s 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 July 2019

For the month of July, we forecast that the best trades will be short USD/CAD and short USD/JPY.

For the month of June, we forecast that the best trade would be short USD/JPY. The forecast’s final performance is shown below:

Weekly Forecast June 30

Last week, we made no weekly forecast. This week, we forecast that the NZD/JPY currency cross will decline in value.

41% of the important currency pairs and crosses moved by more than 1% in value over the past week. Volatility is likely to be at a similar over the coming week.

Last week was dominated by relative strength in the New Zealand Dollar, and relative weakness in the Japanese Yen.

Previous Monthly Forecasts

You can view the results of our previous monthly forecasts here.

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 should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:

USD/JPY

Let’s see how trading one of these key pairs last week off key support and resistance levels could have worked out:

We had expected the level at 108.16 might act as resistance, 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 towards the end of last Thursday’s Asian session (a great time to trade partly Asian currency pairs such as USD/JPY) turning bearish right away with a pin candlestick marked by the down arrow signaling the timing of the turn. This trade was profitable, achieving a maximum positive reward to risk ratio of approximately 3 to 1 so far based upon the size of the entry candlestick.