This week we will start with our monthly and weekly forecasts of currency pairs that are worth seeing. The first part of our forecast is based on our investigation of the last 16 years of Forex prices, which show that the following methodologies have produced profitable results:

  • Trading with the two currencies that are having the strongest trend in the last 3 months.
  • Assuming trends are ready to reverse after 12 months.
  • Operating against the strong counter-trend movements of currency pairs made during the previous week.
  • Purchase of currencies with high interest rates and sale of currencies with low interest rates.

Let’s look at the relevant data of changes in currency prices and interest rates to date, which we have compiled using a weighted index of the main world currencies:

Major Currency Chart - Operating in Support and Resistance

Monthly forecast August 2019

For the month of August, we forecast that the best trades would be GBP / JPY and AUD / JPY . The evolution of the forecast to date is shown below:

Main currency table - Operating in Support and Resistance

Weekly Forecast August 25, 2019

Last week, we did not make any weekly forecasts. We do not make forecasts this week, since our weekly forecasts are based on the disappearance of strong movements contrary to trends, and there were no such movements during the past week. 
The Forex market has remained relatively quiet, with less than 26% of currency pairs and major crossings moving at more than 1% in value during the last week. Volatility is likely to be similar during the next week. 
Last week was dominated by the relative strength of the British pound and the relative weakness of the Australian dollar.

Key Support and Resistance Levels for Popular Peers

We teach that operations must be entered and exited at or very close to the key support and resistance levels. There are certain key levels of support and resistance that should be observed in the most popular currency pairs this week, which could result in reversals or ruptures:

Support and Resistance Main Pairs


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

USD / CHF

We hoped that the 0.9876 level could act as resistance since it had previously acted as both support and resistance. Notice how these levels of “flipping” can work well. Chart H1 shows how the price rejected this level towards the beginning of last Friday’s session in New York (a good time to trade with currency pairs in US dollars such as USD / CHF), becoming bearish immediately with a marked candlestick by the down arrow indicating the moment of the turn This operation was profitable, achieving a maximum positive risk-reward ratio of approximately 8 to 1 so far based on the size of the entrance candlestick, due to the rapid and strong directional movement.

USD / CHF Support and Resistance


 
USD / CAD

We hoped that the 1,3251 level could serve as support since it had previously served both as support and resistance. Notice how these levels of flipping can work well. Chart H1 shows how the price rejected this level towards the start of last Monday’s session in New York (a good time to trade with currency pairs in US dollars such as USD / CAD), becoming bullish immediately with a bullish break inside the candlestick marked by the upward arrow to the left that indicates the moment of rotation. This operation was profitable, achieving a maximum positive risk-reward ratio of approximately 4 to 1 so far based on the size of the entry candlestick. The trade was established for the second time at the end of the week as a double fund formed in 1.3251,

USD / CAD support and resistance