EUR/USD: Narrowing triangle
Yesterday’s signals were not triggered as there was no bullish price action when 1.1328 and 1.1269 were first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1320 or 1.1354.
- Place 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.
- Take off 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 Ideas
- Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1222 or 1.1155.
- Place 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.
- Take off 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 the technical picture had become more bullish and I was prepared to take a bullish bias if the price was above 1.1350 at 9 am London time. It was not, and this was a good call to keep out of trouble because the high of the day was made at about 1.1350.
I also thought that if the support level at 1.1328 broke down, we would be likely to see a deeper bearish retracement. This was a great call as after breaking below 1.1328, the price fell by another 100 pips before starting to recover.
The technical situation has become more interesting, as shown in the price chart below. We have both a narrowing triangle which must soon produce a breakout and a medium-term bearish head and shoulders pattern with an obvious pivotal “neckline” at 1.1222. This means that 1.1222 is likely to be very pivotal.
Much will now depend upon whether the price will next get established above 1.1354, which would be a bullish breakout beyond the triangle suggesting higher prices, or below 1.1222 which would probably trigger a further fall to at least 1.1155.
I would also be prepared to trade reversals at either 1.1222 or 1.1354. This pair is looking increasingly likely to produce good trading opportunities soon.
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Regarding the USD, the Chair of the Federal Reserve will be testifying before Congress at 3pm London time. There is nothing of high importance scheduled today concerning the EUR.