December 3, 2022
  • December 3, 2022

Trade support and resistance

By on May 15, 2022 0

Get our trading strategies with our monthly and weekly predictions of currency pairs to watch using support and resistance for the week of May 16, 2022.

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This week I will start with my monthly and weekly predictions of the currency pairs to watch. The first part of my forecast is based on my research of the last 20 years on Forex prices, which shows that the following methodologies have all produced profitable results:

Let’s take a look at the relevant data on currency price movements and interest rates to date, which we have compiled using a trade-weighted index of major world currencies:

Monthly forecast May 2022

For the month of May, I predicted the US Dollar Index (USDX) to rise in value. So far, it has risen 0.79% this month.

Weekly Forecast 15and May 2022

Last week, I did not make any weekly forecast as there were no abnormally strong countertrend price movements in the Forex market during the previous week. I’m not making any predictions this week yet.

The Forex market has seen its level of direction volatility increased slightly last week, with 51% of all major currency pairs or crosses moving more than 1% in value. Directional vVolatility should remain the same over the coming week.

Last week was dominated by the relative strength of the Japanese Yen and the relative weakness of the Australian and New Zealand Dollars and the Euro.

You can trade my predictions on a live or demo Forex brokerage account.

Main support/resistance levels for popular pairs

I teach that trades should be entered and exited at or very close to the key support and resistance levels. There are some key support and resistance levels that can be seen on the most popular currency pairs this week.

currency pair

Main support/resistance levels

AUD/USD

Support: 0.6904, 0.6866, 0.6774, 0.6683 Resistance: 0.7059, 0.7125, 0.7180, 0.7227

EUR/USD

Support: 1.0444, 1.0427, 1.0372, 1.0350 Resistance: 1.0425, 1.0444, 1.0591, 1.0604

GBP/USD

Support: 1.2226, 1.2139, 1.1976, 1.1900 Resistance: 1.2277, 1.2406, 1.2500, 1.2624

USD/JPY

Support: 130.01, 129.83, 129.55, 128.59 Resistance: 129.45, 130.01, 131.50, 132.00

USD/JPY

Support: 89.09, 88.37, 86.55, 86.19 Resistance: 89.93, 90.32, 90.52, 91.99

EUR/JPY

Support: 134.35, 133.66, 132.35, 131.91 Resistance: 136.83, 138.26, 140.00, 140.67

USD/CAD

Support: 1.2869, 1.2794, 1.2778, 1.2684 Resistance: 1.2953, 1.2995, 1.3020, 1.3127

USD/CHF

Support: 0.9975, 0.9833, 0.9791, 0.9753 Resistance: 1.0050, 1.0111, 1.0139, 1.0211

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

EUR/USD

I was expecting the level at $1.0591 could work as a resistoras it had previously acted as both support and resistance. Notice how suchreversal levels can be very reliable reversal points. The H1 graph below shows how price rejected this level with bearish price action which included a relative inside bar during the New York session last Monday. The entry point is marked by the down arrow in the price chart below. This trade was very profitable, reach a positive maximum risk-reward ratio just under 5 to 1 depending on the size of the entry candlestick pattern.

GBP/USD

I was expecting the level at $1.2406 could work as a resistoras it had previously acted as both support and resistance. Notice how suchreversal levels can be very reliable reversal points. The H1 graph below shows how price rejected this level with a large engulfing candlestick during Monday London/New York overlapping session, which is often a good time of day to trade Forex. The entry point is marked by the down arrow in the price chart below. This trade was not very profitable, achieve a maximum positive risk-reward ratio of only 1.5 to 1 because the entry candlestick pattern was so big (it had a range of about 100 pips). It’s a good lesson in how very large signal candlesticks should be treated with caution and can often be better traded by switching to a shorter time frame.

It’s all for this week. You can trade my predictions on a live or demo Forex brokerage account to test the strategies and build your confidence before investing real funds.