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 March 2016
This month, we forecasted that the AUD would rise in value against the USD. The performance so far has been positive:
Weekly Forecast 13th March 2016
Last week, we forecasted that GBP/USD would fall in value. Unfortunately this pair actually rose quite strongly, by a total of 1.12%.
This week, we forecast that GBP/NZD will fall in value, as there has been a very strong counter-trend move over this past week.
This week has seen strength primarily in the Australian Dollar, as well as in the New Zealand Dollar, Canadian Dollar and Euro. The U.S. Dollar is weak. Broadly speaking, there is a continuing improvement in global risk sentiment which has seen risk and commodity currencies, as well as stocks and crude oil, rise in value.
Volatility was much less compared to the previous week, with approximately half of the major and minor currency pairs changing in value by more than 1%. Volatility is very likely to be much higher this coming 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:
