Saturday, 16 October 2021 06:39 GMT

Trading Support and Resistance


(MENAFN- Daily Forex) This week we will 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 20 years of Forex prices, which show that the following methodologies have all produced profitable results:

  • Trading the two currencies that are trending the most strongly over the past 3 months.
  • Assuming that trends are usually ready to reverse after 12 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.

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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:

Monthly Forecast September 2021

For the month of September, we forecasted that if the EUR/USD currency pair ends a week above 1.1908, it will be likely to rise further over the rest of the month. The price has not yet breached 1.1908.Weekly Forecast 26th September 2021

Last week, we made no weekly forecast, as there were no unusually strong counter-trend movement last week. We again make no weekly forecast this week.

The Forex market saw a steadying level of volatility last week , with 22% of all the important currency pairs or crosses moving by more than 1% in value. Volatility is likely to remain at a similar level or to decrease over the coming week .

Last week was dominated by relative strength in the Canadian dollar, and relative weakness in the Japanese yen.

You can trade our forecasts in a real or demo Forex brokerage account .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 can be watched on the more popular currency pairs this week.

Currency Pair

Key Support / Resistance Levels

AUD/USD

Support: 0.7239, 0.7223, 0.7218, 0.7181

Resistance: 0.7266, 0.7282, 0.7302, 0.7375

EUR/USD

Support: 1.1701, 1.1517, 1.1467, 1.1394

Resistance: 1.1730, 1.1754, 1.1769, 1.1793

GBP/USD

Support: 1.3588, 1.3560, 1.3527, 1.3502

Resistance: 1.3696, 1.3765, 1.3805, 1.3811

USD/JPY

Support: 110.37, 110.20, 110.00, 109.64

Resistance: 110.97, 111.17, 111.37, 111.50

AUD/JPY

Support: 79.83, 79.69, 79.20, 78.83

Resistance: 80.43, 80.70, 81.41, 81.62

EUR/JPY

Support: 129.38, 129.06, 128.69, 128.53

Resistance: 129.83, 130.21, 130.42, 131.09

USD/CAD

Support: 1.2581, 1.2487, 1.2466, 1.2424

Resistance: 1.2668, 1.2729, 1.2808, 1.2847

USD/CHF

Support: 0.9204, 0.9150, 0.9118, 0.9072

Resistance: 0.9270, 0.9303, 0.9318, 0.9335

Let us see how trading reversals from one of last week's key levels would have worked out:AUD/USD

We had expected the level at 0.7223 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 how the price rejected this level with a large outside candlestick just at the start of last Monday's New York session (typically a great time to be trading currency pairs involving the US Dollar like this one) marked by the up arrow in the price chart below. This trade has been profitable, achieving a maximum positive reward to risk ratio of more than 2 to 1 based upon the size of the entry candlestick.

That is all for this week. 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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