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 June 2017
Last month we forecast that the highest-probability trades would be long GBP/USD and USD/CAD. The overall performance was negative:
This month, we forecast the highest-probability trade will be long EUR/USD.
Weekly Forecast 4th June 2017
Last week, we forecasted that the EUR/NZD currency cross would rise in value. Unfortunately, it fell slightly, by 0.22%.
This week, we make no forecast.
This week has been dominated by relative strength in the New Zealand Dollar and the Euro, and relative weakness in the Australian and U.S. Dollars.
Volatility was lower than it was last week, with only 26% of the major and minor currency pairs changing in value by more than 1%. Volatility is likely to be greater 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
that should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:
Let’s see how trading two of these key pairs last week off key support and resistance levels could have worked out:
