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 11

This week, we forecast that the EUR/GBP currency cross is likely to fall in value, which the GBP/CHF currency cross is likely to rise in value, as these crosses had unusually strong counter-trend price movements over the past week.

The Forex market showed a strong increase in its level of volatility last week, with 44% of the important currency pairs and crosses moving by more than 1% in value. Volatility is likely to remain at a similar level over the coming week.

Last week was dominated by relative strength in the Swiss franc, and relative weakness in the British pound.

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 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:

USD/JPY

We had expected the level at 109.00 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 doji just at the open of last Monday’s New York session, marked by the up arrow in the price chart below, which is typically a good time to be trading major currency pairs of such as this one. This trade has been nicely profitable, achieving a maximum positive reward to risk ratio so far of more than 4 to 1 based upon the size of the entry candlestick structure.