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 2017
This month we forecasted that the highest-probability trades will be long USD/CAD and short NZD/USD. The performance so far is as follows:
Weekly Forecast 12th March 2017
Last week, we made no forecast, as there were no strong counter-trend movements.
This week, we again make no forecast, as although there is a strong counter-trend movement in the EUR/NZD, we see the NZD as too weak to become long of.
This week has been dominated by relative strength in the Euro, and relative weakness in the New Zealand Dollar and the British Pound.
Volatility was lower than last week, with only 37% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be much higher over this coming week. You can trade our forecasts in a real or demo Forex brokerage account.
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:
