Trading Support and Resistance

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Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of March 21, 2022.

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This week I will begin with my monthly and weekly forecasts of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let us 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:

Currency Price Changes and Interest Rates

Monthly Forecast March 2022

For the month of March, I forecasted last week that the EUR/USD currency pair would fall in value. Its performance to dates shown below.

Currency Pair

Forecast Direction

Interest Rate Differential

Performance to Date

EUR/USD

Short ↓

+0.50% (0.50% – 0.00%)

-1.11%

 

 

 

 

Weekly Forecast 20th March 2022

Last week I forecasted that the GBP/SEK currency cross will be likely to rise in value. Unfortunately, it fell in value by 2.39%.

This week, I forecast that the EUR/SEK currency cross will be likely to rise in value.

The Forex market saw its level of directional volatility increase slightly last week, with 56% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to fall at least a little over this coming week, as markets seem to have shifted into a more risk-on mode, and because there are fewer high-impact data releases scheduled.

Last week was dominated by relative strength in the Australian Dollar, and relative weakness in the Japanese Yen.

You can trade our forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

I 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 can be watched on the more popular currency pairs this week.

Currency Pair

Key Support / Resistance Levels

AUD/USD

Support: 0.7405, 0.7321, 0.7275, 0.7200

Resistance: 0.7430, 0.7439, 0.7454, 0.7513

EUR/USD

Support: 1.0956, 1.0710, 1.0639, 1.0615

Resistance: 1.1072, 1.1142, 1.1241, 1.1272

GBP/USD

Support: 1.3079, 1.3005, 1.2785, 1.2650

Resistance: 1.3273, 1.3316, 1.3357, 1.3458

USD/JPY

Support: 119.12, 119.00, 118.37, 118.10

Resistance: 119.04, 119.12, 119.60, 120.00

AUD/JPY

Support: 87.69, 86.55, 86.19, 85.80

Resistance: 88.43, 89.49, 89.69, 90.49

EUR/JPY

Support: 131.22, 130.58, 130.23, 130.00

Resistance: 131.91, 132.35, 133.63, 134.16

USD/CAD

Support: 1.2535, 1.2498, 1.2372, 1.2250

Resistance: 1.2654, 1.2675, 1.2753, 1.2778

USD/CHF

Support: 0.9286, 0.9236, 0.9072, 0.9000

Resistance: 0.9333, 0.9372, 0.9381, 0.9438

Let us see how trading reversals from two of last week’s key levels could have worked out:

AUD/JPY

I had expected the level at 84.61 might function as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price rejected this level with a pin bar at the start of last Tuesday’s London session (typically a great time to enter trades in the Forex), marked by the up arrow in the price chart below. This trade has been extremely profitable, achieving a maximum positive risk reward ratio of more than 11 to 1 based upon the size of the entry candlestick.

AUD/JPY Hourly Chart

USD/CHF

I had expected the level at 0.9438 might function as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price rejected this level with a large pin bar during last Wednesday’s New York session, marked by the down arrow in the price chart below. This trade has been profitable, achieving a maximum positive risk reward ratio of more than 2 to 1 based upon the size of the entry candlestick.

USD/CHF Hourly Chart

That is all for this week. You can trade my forecasts in a real or demo Forex brokerage account to test the strategies and strengthen your self-confidence before investing real funds.

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