Subject: Forex Overview (January 25th) - FX Academy
 Dear Friend, Each week we like to send out our thoughts on the Forex market, not only to highlight potential trade set-ups for you to watch out for, but also to enhance your learning with some real-time market analysis. 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 January 2014 We forecasted that the pair most likely to change in value significantly during the month of January was the USD/JPY. This pair had been the strongest mover in the market over the previous 3 month and 6 month periods.
Weekly Forecast 25th January 2015 We made no weekly forecast last week. This week was dominated by the continuing long-term strength in the USD and weakness in the CAD and EUR. The AUD and NZD also finally fell sharply in value by more than 2% each. There has been continuing volatility in the CHF but it closed the week overall as a currency roughly where it opened. The GBP and JPY have also strengthened a little and this is not a sudden development, it has been happening for a while. It was a volatile week all round, with more than two –thirds of the major and minor currency pairs fluctuating in value by more than 1%. There were two exceptionally strong counter-trend moves in the CHF/JPY and NZD/JPY currency crosses, so for our weekly forecast we look at long trades in both of them, with the trades taken together in terms of splitting the risk in position sizing. You can trade our forecasts in a real or demo Forex brokerage account. Previous Monthly Forecasts Our forecast for December 2014 was long USD/JPY. The forecast performed positively, as shown below:
Our forecast for November 2014 was long USD/JPY. The forecast performed extremely positively, as shown below:
Our forecast for October 2014 was short EUR/USD and long USD/JPY. The forecast performed very positively, as shown below:
Earlier monthly forecasts may be seen here. 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:
Let’s see how trading some of these key pairs last week off key support and resistance levels could have worked out: EUR/USD We had expected the zone from 1.1650 to 1.1700 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work really well. The H4 chart below shows how there was an opportunity to go short off this level last week. The price rose to bounce off 1.1650 quite early during the week, before forming a candle that was very close to being a bearish engulfing candle. This finally broke down with another, much stronger bearish engulfing candle that formed the following day during the New York session when the ECB announced its program of Quantitative Easing. If a take profit level had been set at our anticipated support level of 1.1000, then this trade would still be open with 305 pips profit from a risk of about 140 pips.
That’s all until next week. Our next newsletter will be coming to you on Sunday 1st February. You can trade our forecasts in a real or demo Forex brokerage account. Adam Lemon
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