Last Tuesday’s EUR/USD signals were not triggered, as the bearish price action took place above the resistance level identified at 1.2070.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered 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 1.2075, 1.2106, or 1.2142.
- Place 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 1.2016, 1.1991, or 1.1943.
- Place the stop loss 1 pip below the local swing low.
- 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 last Tuesday that we were seeing a reasonably strong selloff of the U.S. Dollar with the Euro one of the strongest major currencies.
Due to residual bullish momentum, I was looking to trade this pair in the long direction, but I wanted to see a retracement to the 1.2000 area first. Traders can try to get long before this level is reached but it did not look especially obvious that the price will have the strength to make new highs above 1.2070.
This was a good call as the price was unable to really trade much above 1.2075. The retracement and bullish bounce which I was looking for at 1.2000 happened the next day, which was unfortunate, but proved I was on the right track.
The technical picture is one of muted bullishness, caused of course by the approaching (at the time of writing) policy release from the ECB.
If the release is seen as neutral or even slightly positive for the Euro for any reason, I think the price has the potential to pop up quickly beyond 1.2050 but may not be able to clear the closest resistance level at 1.2075.
I am not looking to take any short trade in this currency pair today but instead will be happy to enter a long if get a bullish bounce from any of the nearby support levels after the ECB release.
Regarding the EUR, the European Central Bank will be releasing its Main Refinancing Rate and Monetary Policy Statement at 12:45pm London time, followed by the usual press conference 45 minutes later. There is nothing of high importance scheduled today concerning the USD.