Trading Support and Resistance

Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of April 18, 2022.

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This week I will begin with my monthly and weekly forecasts 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:

Monthly Forecast April 2022

For the month of April, I forecasted that the US Dollar Index (USDX) will rise in value. It has risen by 1.14% to date this month.

Weekly Forecast 17^th April 2022

Last week, I made no weekly forecast as there were no unusually strong counter-trend price movements in the Forex market over the previous week. I again make no forecast this week.

The Forex market saw its level of directional volatility increase over the past week, with one third of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease over this coming week, as there are relatively few high-impact data releases scheduled.

Last week was dominated by relative strength in the British Pound and the US Dollar, and relative weakness in the Japanese Yen.

You can trade my forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

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 watched on the more popular currency pairs this week.

Key Support and Resistance Levels

Let us see how trading reversals from two of last week’s key levels could have worked out:

AUD/USD

I had expected the level at 0.7493 might function as resistance, as it acted as both support and resistance alternately during the previous week. Note how such flipping levels can be very reliable reversal points. I was also happy to look for a short trade at this level due to its confluence with a major round number at 0.7500. The H1 chart below shows how the price rejected this level with a pin bar during the London-New York overlap last Tuesday’s, which is often a great time to enter trades in currency pairs. The entry point is marked by the down arrow within the price chart below. This trade has been nicely profitable, achieving a maximum positive risk reward ratio so far of more than 5 to 1 based upon the size of the entry candlestick.

USD/CAD

I had expected the level at 1.2675 might function as resistance, as it acted as both support and resistance earlier. Note how such flipping levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with a pin bar right at the start of last Wednesday’s New York session, which is often a great time to enter trades in currency pairs and to look for strong reversals. The entry point is marked by the down arrow within the price chart below. This trade has been nicely profitable, achieving a maximum positive risk reward ratio so far of more than 3 to 1 based upon the size of the entry candlestick.

That is all for this week. You can trade my forecasts in a real or demo Forex brokerage account to test the strategies and strengthen your self-confidence before investing real funds.