EUR/USD: Bearish consolidation pattern
Yesterday’s signals produced a profitable long trade worth about 40 pips maximum from the bullish bounce at the support level identified at 1.1195.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered before 5 pm London timetoday.
Short Trade Ideas
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1289, 1.1311, 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 1.1195 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 I did not see any good potential opportunities here with the exception of a potential long trade from a bullish bounce off the support level at 1.1195. I generally expected the price would consolidate.
This was an excellent call as the price action did give a profitable trade from a bullish bounce at 1.1195 just as I had expected it might, while the wider consolidative pattern continues.
I see the fact that the bounce from the now triple bottom at 1.1195 has been quite small as making the technical picture a little bearish although essentially still consolidative. Risk sentiment has soured a little which is boosting the U.S. Dollar, and this could help to cause a breakdown later below 1.1195.
A break below 1.1195 could well cause a quick move down to the next support level at 1.1155, so I am prepared to take a bearish bias later if we get two consecutive hourly closes below 1.1195 and 1.1175 targeting take profit at 1.1155.
There is nothing of high importance scheduled today regarding the EUR. Concerning the USD, there will be a release of the ADP Non-Farm Employment change forecast at 1:15 pm London time.