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 16 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 August 2017

    For the month of August, we forecasted that the best trades would be long EUR/USD and AUD/USD, and short USD/CAD. The final performance was very slightly negative:

    For September, we forecast that the best trades will be long Gold and short USD/CAD.

    Weekly Forecast 3rd September 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 British Pound, and relative weakness in the New Zealand Dollar.

    Volatility was a little higher than last week, with approximately 37% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be still higher over this coming week.

    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:

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