EUR/USD: New resistance levels below 1.2000
Yesterday’s signals produced a nicely profitable short trade from the bearish rejection by a large outside candlestick of the resistance level I had identified at 1.2005. It looks like it will be a good idea to let this trade run.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken prior to 5pm London time today.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1875 or 1.1929.
- 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
- Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1849, 1.1786, or 1.1745.
- Place the stop loss 1 pip below the local swing low.
- 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 area of resistance at 1.2000 should now be very pivotal. The U.S. Dollar was weak everywhere, but it would have been a little surprising if we see the price get established above 1.2005.
I thought that short trades, maybe scalps, from failures at 1.2000 / 1.2005 could also be good trading opportunities here, especially near the start of the London session.
This was a great call as the price began to fall very strongly – and is still falling as at the time of writing – after it hit 1.2005. There were clearly big selling orders waiting at 1.2000.
I would normally expect a rebound after a sharp fall in this currency pair, which has a habit of pulling back and rebounding. However, the price is continuing to fall and break below a few former support levels, so I do not expect to see any meaningful bullish recovery. Despite that I am not sure that the price is going to fall much further, as the support at 1.1786 looks very strong and even the support at 1.1850 may hold.
I will take a short trade from any retracement to a resistance level following by a bearish rejection of the level. I am also prepared to take a long trade from a bullish bounce which might happen later at 1.1786.
There is a U.S. new jobs forecast due later today which may cause volatility if the number surprises the market’s consensus expectation.
Concerning the USD, there will be a release of the ADP Non-Farm Employment Change Forecast at 1:15pm London time. There is nothing of high importance due today regarding the EUR.