Trading Support And Resistance – October 31

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 October 2016

This month we forecast that the highest-probability trade would again be long NZD/USD. So far, the trade is at a loss:

Weekly Forecast 30th October 2016

Last week, we made no forecast.

This week, we again make no forecast, as there were no strong counter-trend movements.

This week has been dominated by relative strength in the Euro, and relative weakness in the Japanese Yen and British Pound.

Volatility was considerably less than it was over the previous week, with only 25% of the major and minor currency pairs changing in value by more than 1%. Volatility should be much greater over this coming week, as there is a very heavy news schedule with central bank input due for at least four major global economies, including the highlights of the U.S. Dollar’s regular releases as we approach the upcoming U.S. Presidential election on 8th November.

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: