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. The situation is the same this week, so I again make no weekly forecast.
This week I will begin with my monthly and weekly Forex forecast of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 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:
For the month of May, I forecasted that the EUR/USD and GBP/USD currency pairs would rise in value.
The performance of this forecast was as follows:
For the month of June, I forecast that the GBP/USD currency pair will rise in value.
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. The situation is the same this week, so I again make no weekly forecast.
Directional volatility in the Forex market decreased last week with only 26% of the most important currency pairs and crosses fluctuating over the week by more than 1%. Volatility will probably remain the same over the coming week, as we have a similar schedule of high-impact data releases scheduled for the coming week compared to last week.
Last week was dominated by relative strength in the Canadian Dollar, and relative weakness in the US Dollar.
You can trade my forecasts in a real or demo Forex brokerage account.
I 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 us see how trading two of these key pairs last week off key support and resistance levels could have worked out:
I had expected the level at ¥140.19 might act as support in the USD/JPY currency pair 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 New York session (which can be a great time to enter trades in major currency pairs like this one) with a small, inverted hammer / pin bar candlestick, marked by the up arrow in the price chart below signaling the timing of this bullish rejection. This trade was profitable, giving a maximum reward-to-risk ratio of more than 1 to 1 based upon the size of the entry candlestick.
I had expected the level at $0.9021 might act as support in the USD/CHF currency pair 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 Tuesday’s New York session (which can be a great time to enter trades in major currency pairs like this one) with a large, outside / engulfing candlestick, marked by the up arrow in the price chart below signaling the timing of this bullish rejection. This trade was nicely profitable, giving a maximum reward-to-risk ratio of more than 5 to 1 based upon the size of the entry candlestick structure.
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