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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 June 2023

For the month of June, I forecasted that the GBP/USD currency pair would rise in value. The performance of this forecast so far is as follows:

Weekly Forecast for Sunday, June 11, 2023

Last week, I made no weekly forecast, as there were no unusually large counter-trend price movements, which is the basis of my weekly trading strategy. This week, I think that the AUD/USD currency pair is slightly more likely to decline, while the EUR/NOK currency cross is likely to rise in value.

Directional volatility in the Forex market remained the same last week, with 26% of the most important currency pairs and crosses fluctuating over the week by more than 1%. Volatility will probably be higher over the coming week, as the US Federal Reserve will be meeting to decide whether to hike interest rates again.

Last week was dominated by relative strength in the Australian dollar, and relative weakness was seen in the US dollar.

Key Support/Resistance Levels for Popular Pairs

I often 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 monitored on the more popular currency pairs this week.

Let's see how trading two of these key pairs last week off of key support and resistance levels could have worked out.

EUR/JPY

I had expected the level at JPY148.64 might act as support in the EUR/JPY currency cross last week, as it had acted previously 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 Monday’s London session (which can be a great time to enter Forex trades) with a large engulfing bar, 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.

USD/CAD

I had similiarly expected the level at $1.3455 might act as resistance in the USD/CAD currency pair last week, as it had also acted previously as both support and resistance.

The H1 price chart below shows how the price rejected this level right at the start of last Monday’s London/New York session overlap with a very large doji candlestick, marked by the downward arrow, signaling the timing of this bearish rejection. This trade was similarly profitable, giving a maximum reward-to-risk ratio of more than 2 to 1 based upon the size of the entry candlestick.

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