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Trading Support and Resistance – EUR/USD, AUD/USD – 04 September 2022

For the month of September, I forecast that the EUR/USD currency pair and the GBP/USD currency pair will decline in value, while the USD/JPY currency pair will increase in value.

This week I will begin with my monthly and weekly Forex forecast of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let us 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 September 2022

For the month of August, I forecasted that the EUR/USD currency pair would decline in value. The final result was nicely profitable, and is shown below:

For the month of September, I forecast that the EUR/USD currency pair and the GBP/USD currency pair will decline in value, while the USD/JPY currency pair will increase in value.

Weekly Forecast 4th September 2022

Last week, I made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market over the previous week. This week, I again make no forecast.

The Forex market saw an increase in directional volatility last week, with 44% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to remain high or even increase over this coming week as there are several very major central bank releases due.

Last week was dominated by relative strength in the Euro and US Dollar, and relative weakness in the British Pound, Japanese Yen, and Swiss Franc.

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

Key Support/Resistance Levels for Popular Pairs

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.

Let us see how trading two of these key pairs last week off key support and resistance levels could have worked out:

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EUR/USD

We had expected the level at $1.0070 might act as resistance in the EUR/USD currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 price chart below shows how the price rejected this level during last Wednesday’s London/New York session overlap with a bearish engulfing candlestick, marked by the down arrow signaling the timing of the bearish rejection. This is typically a great time of day to be entering trades in major Forex currency pairs. This trade has been profitable, achieving a maximum positive reward to risk ratio of more than 4 to 1 so far based upon the size of the entry candlestick structure.

AUD/USD

We had expected the level at $0.6953 might act as resistance in the AUD/USD currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 price chart below shows how the price rejected this level during last Tuesday’s London session with a bearish doji candlestick, marked by the down arrow signaling the timing of the bearish rejection. This is typically a great time of day to be entering trades in major Forex currency pairs. This trade has been extremely profitable, achieving a maximum positive reward to risk ratio of more than 10 to 1 so far based upon the size of the entry candlestick.

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