Trading support and resistance


Get our trading strategies with our monthly and weekly forecasts of currency pairs to watch using support and resistance for the week of December 13, 2021.

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This week we’ll start with our monthly and weekly forecasts of currency pairs to watch. The first part of our forecast is based on our research of Forex prices for the past 20 years, which shows that the following methodologies have all produced profitable results:

  • Trade the two trending currencies over the past 3 months.

  • Assuming that trends are usually ready to reverse after 12 months.

  • Trade vs very strong weekly counter-trend movements by currency pairs made during the previous one the week.

  • Carry Trade: buying currencies with high interest rates and selling currencies with low interest rates.

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

Currency price changes and interest rates

Monthly Forecast December 2021

For the month of December, we had forecast a decline in the value of the GBP / USD and EUR / USD currency pairs. The performances to date are presented below:

Currency pair

Forecast orientation

Interest rate differential

Performance to date

EUR / USD

Short

+ 0.25% (0.25% – 0.00%)

+ 0.19%

EUR / USD

Short

+ 0.15% (0.25% – 0.10%)

+ 0.22%

Weekly forecast 12e december 2021

In our previous forecast last week, we didn’t make any weekly forecasts, as there hadn’t been any unusually strong countertrend movements during the previous week. Last week the AUD / USD currency pair made a very strong countertrend, but I don’t believe in a short fading of this currency pair. as the move is based on improving risk sentiment which I think is likely to continue, so we are not making any weekly forecasts again. Mitigating strong weekly price countertrend movements is the basis of our weekly trading strategy.

The Forex market saw a slight increase in its directional level volatility Last week, with 33% of all major currency pairs or crosses moving more than 1% in value. Directional volatility is likely to increase next week due to the substantial number of high impact data releases scheduled for release.

The past week was dominated by the very high relative strength of the Australian dollar, some strength of the Canadian dollar and the relative weakness of the Japanese yen, Swiss franc and US dollar.

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

Key support / resistance levels for popular pairs

We teach that trades must be entered and exited at or very near the key support and resistance levels. Some key support and resistance levels can be seen on the most popular currency pairs this week.

Currency pair

Key support / resistance levels

AUD / USD

Supported: 0.7159, 0.7123, 0.7083, 0.7051

Resistance: 0.7205, 0.7271, 0.7302, 0.7321

EUR / USD

Supported: 1.1302, 1.1267, 1.1229, 1.1195

Resistance: 1.1327, 1.1394, 1.1456, 1.1514

GBP / USD

Supported: 1.3255, 1.3239, 1.3141, 1.3079

Resistance: 1.3310, 1.3414, 1.3523, 1.3606

USD / JPY

Pick-up: 113.28, 113.07, 111.55, 111.23

Strength: 113.79, 114.16, 114.53, 115.25

AUD / JPY

Support: 80.68, 80.50, 79.81, 78.59

Strength: 81.90, 82.17, 82.68, 84.14

EUR / JPY

Supported: 127.44, 126.88, 126.65, 126.43

Strength: 128.42, 128.71, 129.56, 130.03

USD / CAD

Supported: 1.2680, 1.2637, 1.2611, 1.2571

Resistance: 1.2733, 1.2847, 1.2990, 1.3000

USD / CHF

Supported: 0.9072, 0.9000, 0.8969, 0.8943

Resistance: 0.9215, 0.9271, 0.9370, 0.9387

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

EUR / USD

We expected the level at 1.1229 to be able to function as support, as it previously acted as both support and resistance. Note how these “reversible” levels can work well. The H1 chart below shows how the price rejected this level with an uptrend inside the candlestick During last Tuesday’s London / New York straddle session, generally a good time to enter new trades in major currency pairs, marked with the up arrow in the price chart below. This trade was well profitable, reaching a maximum of positives reward / risk ratio more than 4 to 1 depending on the size of the entry candlestick structure.

Hourly EUR / USD chart

USD / CHF

We expected the level at 0.9271 to be able to function as resistance, as it previously acted as both support and resistance. Note how well these “reversing” levels can work. The H1 chart below shows how price rejected this level with a bearish engulfing candlestick during last Tuesday’s London / New York overlap session, often a good time to enter a new trade in a major currency pair in the Forex such as USD / CHF, marked with the down arrow in the price chart below. This trade has been profitable so far, reaching a maximum positive reward / risk ratio of over 2 to 1 depending on the size of the entry candlestick structure.

Hourly USD / CHF chart

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


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