Trading Support and Resistance- EUR/USD

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:

Currency Price Changes and Interest Rates

For the month of July, I forecasted that the USD/JPY currency pair would rise in value.

The performance to date of this forecast is as follows:

July 2023 Monthly Forecast Performance to Date

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 forecast that the following currency crosses are likely to see rises in value: GBP/SEK, EUR/SEK, and EUR/NOK.

Directional volatility in the Forex market increased last week with 52% of the most important currency pairs and crosses fluctuating over the week by more than 1%. Volatility will probably be lower over the coming week, as the weekly data schedule is much lighter.

Last week was again dominated by relative strength in the Japanese Yen, 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.

Key Support and Resistance Levels

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

I had expected the level at $1.0944 might act as support in the EUR/USD 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 Forex trades in major currency pairs such as this one) with a large engulfing bar, marked by the green up arrow in the price chart below signaling the timing of this bullish rejection. This trade was very profitable, giving a maximum reward-to-risk ratio of almost 9 to 1 based upon the size of the entry candlestick structure.

EUR/USD Hourly Price Chart

Ready to trade our Forex weekly forecast? Here’s a list of some of the best Forex trading platforms to check out.