Trading Support And Resistance- Sunday, May 9

Bank Note, Euro, Bills, Paper Money

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:

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:

Currency Price Changes and Interest Rates

Monthly Forecast May 2021

For the month of May, we forecast that the USD/CAD currency pair would fall in value, and the CAD/JPY currency cross would rise in value. The performance so far has been positive:

Monthly Forecast May 2021

Weekly Forecast May 9

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 an unchanged level of volatility last week, with 26% of the important currency pairs and crosses again moving by more than 1% in value. Volatility is likely to fall over the coming week.

Last week was dominated by relative strength in the Canadian dollar, 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.

Key Support and Resistance Levels

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

EUR/USD

We had expected the level at 1.1994 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 was also a pin bar just at the open of last Wednesday’s London session, marked by the up arrow in the price chart below, which is typically a good time to be trading major pairs involving a European currency such as this one in the Forex market. This trade has been very profitable, achieving an excellent maximum positive reward to risk ratio so far of more than 11 to 1 based upon the size of the entry candlestick structure.

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Disclosure: You can trade our forecasts in a real or demo Forex brokerage ...

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