Trading Support And Resistance - Sunday, Oct. 14

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 October 2018

For the month of October, we forecast that the best trade will be long USD/JPY. The performance to date is as follows:

Currency Pair

Forecast Direction

Interest Rate Differential

Performance to Date

USD/JPY

Long ?

2.35% (2.25% – -0.10%)

-1.29%

Weekly Forecast October 14

Last week, we made no weekly forecast.

We make no weekly forecast this week, as there were no strong counter-trend price movements last week.

Fewer than 15% of the important currency pairs or crosses moved by more than 1% in value over the past week. This volatility is low, but we expect it to be at least a little higher over the coming week.

This week has been dominated by relative strength in the Japanese Yen, and relative weakness in the Canadian Dollar.

Previous Monthly Forecasts

You can view the results of our previous monthly forecasts here.

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: