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 11 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 counter-trend movements by currency pairs made during the previous week.

· Buying currencies with high interest rates and selling currencies with low interest rates.

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:

Monthly Forecast July 2017

This month, we forecast the highest-probability trade as long EUR/USD. The performance to date is nicely positive:

Weekly Forecast July 23,  2017

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

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

This week has been dominated by relative strength in the Euro and the Canadian Dollar, and relative weakness in the British Pound and U.S. Dollar.

Volatility was very slightly lower than last week, with approximately 45% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be at least a little higher over this coming week. 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 should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:

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

USD/JPY

We had expected the level at 112.85 might act as resistance, 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 bounced bearishly off this level after rising strongly, printing a bearish inside candlestick that gave a very good short trade entry opportunity. This trade would have been a good winner with an excellent maximum reward to risk ratio greater than 8 to 1 so far.

USD/CHF

We had expected the level at 0.9658 might act as resistance, 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 bounced bearishly off this level after rising gently, printing a bearish pin candlestick that gave a very good short trade entry opportunity. This trade would have been a good winner with an excellent maximum reward to risk ratio greater than 12 to 1 so far.