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 November 2015

This month we forecast that the most probable movements are short AUD/JPY and AUD/NZD. This forecast has performed negatively so far, as shown below:

For December, we forecast that the most probable movements are short EUR/USD and GBP/USD, as well as long USD/CHF.

Weekly Forecast 29th November 2015

Last week, we made no forecast.

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

This week saw strength in the AUD and USD, and the greatest relative weaknesses was again in the CHF. The EUR is also weak.

Volatility was very low, even lower than the previous week. Approximately 85% of the major and minor currency pairs changed in value by less than 1%. Volatility is very likely to be much higher this week.

Key Support/Resistance Levels for Popular Pairs

At the FX Academy, 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:

Currency Pair Key Support / Resistance Levels

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

USD/CHF

We had expected the level at 1.0215 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work really well. The H1 chart below shows how twice during last Monday the price rose to and rejected this level almost to the pip, before going on to form bearish engulfing candles. The first example would not have seen reward to risk, of almost 2:1, and the second example which occurred during the more active London session achieved a maximum reward to risk ratio of about the same amount.