EUR/USD: Weak bearish turn looks doubtful
Yesterday’s signals were not triggered, as there was no bearish price action when the resistance levels at 1.1241 or 1.1258 were reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8 am and 5 pm London timetoday only.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1294, 1.1320, or 1.1354.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1241, 1.1205, or 1.1155.
- 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.
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 although we were seeing short-term bullish movement, technically we saw see that the price was also firmly contained within a bearish wedge pattern. Therefore, I was looking for a short trade from a bearish reversal at any identified resistance level.
This was enough to keep out of trouble, but we saw the price rise over the day and new higher support levels print. However, the price action started to make a bearish reversal when the upper trend line of the bearish price channel was reached.
The problem is that despite this bearish turn, the support immediately below looks messy and strong, so it does not look like a good idea to take a short trade here. This would probably be better taken in the GBP/USD currency pair as there is no support there after 1.2450, and the British Pound is definitely relatively weaker than the Euro.
I would avoid trading this currency pair today or at least I would not be bearish above 1.1241.
Regarding the EUR, there will be a release of French Flash Services PMI data at 8:15am London time, followed by German Flash Manufacturing and Services PMIs 15 minutes later. There is nothing of high importance scheduled for today concerning the USD.