Last Tuesday’s EUR/USD signals were not triggered, as neither of the key levels identified that day were reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered prior to 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 1.2277.
- 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 entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2161, 1.2139, 1.2126, or 1.2106.
- 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 the technical picture had become more bullish, with the price rising firmly to challenge the former bearish inflective area at around 1.2180. I said that if the price could keep reaching new highs during the day and close in New York firmly above 1.2180 and rising over the short-term, that would be a bullish sign suggesting we would be likely to see higher prices. This was not a great call as the price closed well above 1.2180 at 1.2220, but then fell yesterday.
With yesterday being the first day of bearish retracement after a new multi-month high closing price was made, the odds today are slightly in favour of an up day today – but only slightly, as yesterday’s retracement was relatively deep. However, the price has made a short-term bullish turn that is holding up at the time of writing.
The USD was strengthened yesterday by the FOMC meeting minutes which contained a small hawkish surprise on tapering. However, after only a few hours of that, most assets have begun to recover firmly against the USD, and that certainly includes the euro as one of the relatively strong currencies.
The key things to watch today for traders are the key levels at 1.2161 and the zone between 1.2188 and 1.2200. If the price makes two consecutive hourly closes below 1.2161, that will be a bearish sign that the bullish trend has probably ended for now. Alternatively, if the price can make two consecutive hourly closes above 1.2200, I will take a bullish bias as that will suggest yet higher prices are in store.
Concerning the USD, there will be a release of unemployment claims data at 1:30pm London time. There is nothing of high importance scheduled regarding the EUR.