My previous EUR/USD signal on 4th May was not triggered, as none of the key levels I had identified were reached that day.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0591, $1.0604, or $1.0650.
- Put 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.
- Remove 50% of the position as profit when the price reaches 50 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0444 or $1.0427.
- Put 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.
- 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 on 4th May that the price had been consolidating and finding a great deal of support at the big round number of $1.0500. I thought the FOMC release that day might trigger a decisive breakdown below that round number. In fact, the bearish consolidation has continued, with the price fluctuating without direction just above it. Technically, the situation has not changed – the price continues to look very vulnerable to a bearish breakdown below the consolidation zone, just as it has for the past couple of weeks.
There was another major USD data release yesterday showing higher than expected but arguably declining inflation, yet this did not produce a decisive directional break in the US Dollar.
Given the persistence and narrowness of this consolidation chart pattern at the end of strong downwards price movement over the long-term, it makes sense to look for a short trade here today.
I will be happy to enter short if we get a reversal at the nearest resistance level at $1.0591, or if we get two consecutive hourly closes below $1.0484.
It is interesting that the Euro has been showing some relatively strength, especially against the British Pound, a major trading partner of the EU, which has seen its currency weaken a lot in recent days. For this reason, long USD trades may be more attractive in GBP/USD than in this currency pair.
Concerning the GBP, there will be a release of Preliminary UK GDP data at 7am London time. Regarding the USD, there will be a release of PPI data at 1:30pm.