Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of October 4, 2021.
This week we will 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 20 years of Forex prices, which show that the following methodologies have all produced profitable results:
- Trading the two currencies that are trending the most strongly over the past 3 months.
- Assuming that trends are usually ready to reverse after 12 months.
- Trading against very strong weekly counter-trend movements by currency pairs made during the previous week.
- Carry Trade: Buying currencies with high interest rates and selling currencies with low interest rates.
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 October 2021
For the month of October, we forecast that the EUR/USD currency pair will fall in value. Our September forecast was not triggered as the EUR/USD did not breach the resistance level specified.
Weekly Forecast 3rd October 2021
Last week, we made no weekly forecast, as there were no unusually strong counter-trend movement last week. We again make no weekly forecast this week.
The Forex market saw a steadying level ofvolatilitylast week, with 22% of all the important currency pairs or crosses moving by more than 1% in value. Volatility is likely to remain at a similar level or to decrease over the coming week.
Last week was dominated by relative strength in the Australian and U.S. dollars, and relative weakness in the euro and New Zealand dollars.
There are a some strong valid long-term trends in the market right now, so it is a good time to be trading to take advantage of that.
Big Picture 3rd October 2021
Last week’s Forex market mostly moved in line with prevailing trends. The Australian and US dollars were strong, while the New Zealand dollar and euro were notably weak. Global stock markets moved firmly lower, with the S&P 500 Index having its worst monthly performance since March 2020.
I wrote in my previous piece last week that the best trades were likely to be short in silver and the GBP against the USD once new low daily closing prices had been made below $22.25 and $1.3600, respectively.This produced a tiny loss in GBP/USD and a loss of a little less than 4% in silver, giving an averaged loss of approximately 2%.
Fundamental Analysis & Market Sentiment
The headline takeaways from last week were a worsening global energy crisis, politicking in the US over the passage of huge federal spending (in the trillions) on infrastructure, and the US Federal Reserve’s continued insistence that the recent rise in inflation is transitory.There were almost no significant economic data releases made during the week. Within these headlines,the failure of energy supplies to keep up with global demand and resulting supply chain disruption issues are probably most significant for traders, as this clearly caused a rise over the week in the price of WTI Crude Oil to the highest weekly close in almost 7 years above $75 per barrel.Natural gas briefly traded above $6, a price level which had not been seen for even longer than that. Stock markets were weaker almost everywhereover the week, as the sentiment grows that the US market is due for a major correction in the face of worsening global growth prospects.
This week’s schedule will be dominated by US non-farm payrolls data, the monthly policy release from the Reserve Bank of New Zealand, and the Reserve Bank of Australia’s rate statement.
Last week saw the global number of confirmed new coronavirus cases fall for the sixth consecutive week after previously rising for more than two months, with deaths lower for the fifth consecutive week. Approximately 45.5% of the global population has now received at least one vaccination.
The strongest growths in new confirmed coronavirus cases right now are happening in Barbados, Belarus, Belize, Bulgaria, Croatia, Egypt, Estonia, Latvia, Lithuania, Moldova, Romania, Russia, Singapore, Slovakia, and the Ukraine.
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