Trading Support and Resistance

Currency Price Changes and Interest Rates 

For the month of June, I forecast that the US Dollar Index would rise in value. Since I made the forecast last week, it has increased in value by 0.33%. 

I made no weekly forecast in my previous piece last week. 

This week, I forecast that the CAD/CHF currency cross is likely to increase in value. 

The Forex market saw its level of directional volatility rise again last week, with 52% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease over this coming week. 

Last week was dominated by relative strength in the Swiss Franc, and relative weakness in the Canadian Dollar. 

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.  

Key Support and Resistance Levels 

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

I had expected the level at 91.99 might function as support, as it had previously functioned as both support and resistance. Note how such “flipping” levels can be very reliable reversal points. The H1 chart below shows how the price rejected this level with a bullish engulfing candlestick during last Thursday’s London/New York overlap, which is typically a great time to be trading Forex. The entry point is marked by the up arrow within the price chart below. This trade has been profitable so far, achieving a maximum positive risk-reward ratio slightly higher than 1 to 1 based upon the size of the entry candlestick structure.