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:
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 December 2015
This month we forecast that the most probable movements are short GBP/USD and EUR/USD and long USD/CHF. The forecast has performed negatively so far, as shown below:
Weekly Forecast December 13, 2015
Last week, we forecasted that CHF/JPY and EUR/JPY would probably fall in value. We were correct, with EUR/JPY falling by 0.70% and CHF/JPY falling by 0.30%.
This week, we note the strong counter-trend movements made in NZD/JPY, GBP/AUD and EUR/AUD. We think they will all move in opposite directions this week, in that order of confidence.
This week saw strength in the JPY, CHF and EUR, with strong weakness in the CAD and also in the AUD. We think the focus will quickly shift to the USD this week.
Volatility was quite high, certainly much higher than the previous week. Approximately two thirds of the major and minor currency pairs changed in value by more than 1%. Volatility is likely to also be high this week, especially around the middle and end of the week.
Key Support/Resistance Levels for Popular Pairs.
At the FX Academy, 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:
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