Yesterday’s signals produced a profitable short trade following the bearish engulfing candlestick which sent the price down from the resistance level at 1.1325. The support at 1.1250 is likely to hold over the short-term so at least partial profits should probably be taken.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered before 5pm London time today.
Short Trade
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1325.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
Long Trade
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1250.
Put the stop loss 1 pip above the local swing high.
Adjust the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
EUR/USD Analysis
I wrote yesterday that it made sense to be looking for short trades between 1.1325 and 1.1250 – this looks like a classic slow bearish pattern over the long and medium-term periods. This was a great call as the price rejected the resistance at 1.1325 and moved steadily downwards.
This area at 1.1250 is often strong support, and we are near the bottom of a multi-month range, so despite the long-term bearish trend, I have little confidence that the price will make a decisive break below 1.1250. It could easily bottom out here and move back up to test 1.1325 again. Yet the trend is definitely bearish. If the price breaks below 1.1250 and then retests it and fails from below, I would take a bearish bias today until 1.1150.
Concerning the EUR, the President of the ECB will be giving a minor speech at 8am London time. There is nothing of high importance regarding the USD.