Trading Support and Resistance | DailyForex


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:

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:

Currencies

Monthly Forecast June 2018

For the month of June, we forecasted that the best trade would be long USD/SEK. The performance so far has been a little negative, as shown below:

Currency Pair

Forecast Direction

Interest Rate Differential

Performance to Date

USD/SEK

Long ↑

2.25% (1.75% – -0.50%)

-0.33%

Weekly Forecast 10th June 2018

Last week, we made no forecasts, as there were no strong counter-trend price movements.

This week, we make no forecasts, as there were again no strong counter-trend movements.

This week has been dominated by relative strength in the U.S. Dollar, and relative weakness in the Canadian and Australian Dollars.

Volatility was higher last week, with 41% of the major or minor currency pairs changing in value by more than 1%. Volatility is likely to be similar over the following week.

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

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:

Currency Pair

Key Support / Resistance Levels

AUD/USD

Support: 0.7400, 0.7375, 0.7343, 0.7309

Resistance: 0.7453, 0.7479, 0.7510, 0.7580

EUR/USD

Support: 1.1585, 1.1496, 1.1467, 1.1447

Resistance: 1.1648, 1.1709, 1.1732, 1.1875

GBP/USD

Support: 1.3259, 1.3221, 1.3112, 1.3057

Resistance: 1.3300, 1.3482, 1.3521, 1.3601

USD/JPY

Support: 109.07, 108.05, 107.49, 107.27

Resistance: 110.85, 111.41, 111.75, 112.06

AUD/JPY

Support: 81.73, 81.35, 80.42, 79.99

Resistance: 83.28, 83.65, 84.54, 84.83

EUR/JPY

Support: 127.32, 126.35, 125.60, 124.71

Resistance: 128.97, 129.56, 131.61, 132.57

USD/CAD

Support: 1.3142, 1.3047, 1.2826, 1.2793

Resistance: 1.3254, 1.3312, 1.3362, 1.3464

USD/CHF

Support: 0.9936, 0.9913, 0.9827, 0.9679

Resistance: 0.9985, 1.0005, 1.0111, 1.0150

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

USD/CHF

We had expected the level at 0.9827 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 the how the price hit and rejected this level right at the start of the London session last Thursday, a time of day which is often good for entering trades in European currency pairs such as this one. It made a sharp rejection almost to the pip, printing a bullish doji candlestick on the hourly chart followed by a bullish engulfing candlestick immediately following the rejection of the level, signaling a long trade entry shown by the upwards arrow. Due partially to the smallness of the entry candlestick, this trade has been very profitable, achieving a maximum positive reward to risk ratio so far greater than 11 to 1.

USDCHF

You can trade our forecasts in a real or demo Forex brokerage account to test the strategies and strengthen your self-confidence before investing real funds.



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