EUR/USD: High volatility
Yesterday’s signals were not triggered, as none of the key levels were reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Idea
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1517.
Put the stop loss 1 pip above the local swing high.
Move 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 ride.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1250, 1.1218, or 1.1185.
Put the stop loss 1 pip below the local swing low.
Move 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 ride.
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 this was maybe not a bad pair to trade on shorter time frames today, but the USD/JPY was in the market’s primary focus. I was hoping to take a long trade from a bullish bounce at 1.1250. This was an OK call, I had the right idea, but the bullish bounce so far has happened higher than 1.1250, the low was at 1.1275.
We are seeing high volatility in most financial markets now due to the coronavirus crisis and the sharp fall in the price of crude oil. The Euro is torn between its role as a semi-safe haven and the negative effect of the Italian lockdown and the growing number of cases in Europe generally.
We can expect to see high volatility and swings in the price, although this can be good news for traders as the moves are not choppy on relatively short time frames. The recent volatility has carved out a wide area where movements are quite unpredictable, between 1.1251 and approximately 1.1500 – note how round numbers and psychological levels can become much better tools during crisis periods than other forms of technical analysis.
I remain happy to take a long trade from a bullish bounce at 1.1250 if it sets up later today.
There is nothing of high importance due today regarding the EUR. Concerning the USD, there will be a release of CPI (inflation) data at 1:30pm London time.