EUR/USD: Price likely to rise when risk sentiment recovers
Yesterday’s signals were not triggered, as the bearish price action took place a few pips above the resistance level identified at 1.1381.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered before 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 1.1517.
- 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 1.1321 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 despite the bullish trend I would not be surprised to see a bearish reversal at 1.1381, making that level the day’s key pivotal point.
I also recommended not leaving trades open during the second half of the New York session. Overall, this was an OK call as the resistance level at 1.1381 although exceeded, did cap the price more or less during the first half of the New York session.
Yesterday’s FOMC release produced an initial burst of volatility in both directions before settling into a strengthening U.S. Dollar. This pushed the price down. However, the picture remains relatively bullish for two reasons.
Firstly, the former resistance level at 1.1381 was invalidated by the price action, so the price now has room to rise all the way to the 1.1500 area.
Secondly, the nearest support level at 1.1321 remains intact, and over the last few hours has seemed to provide some support.
There is a long-term bullish trend which suggests the price of this currency pair is more likely to rise than fall. Therefore, as long as the support at 1.1321 holds, we should see a renewed rise as risk sentiment bounces back, as it almost certainly will.
I will take a bullish bias today if we get a firm bullish bounce following a retracement to the support at 1.1321.
There is nothing of high importance due today concerning either the EUR or the USD.