Last Thursday’s EUR/USD signals produced a profitable short trade from the bearish pin bar which rejected the resistance level identified at 1.2106 early in the London session.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Ideas
- Short trade entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2277.
- 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.
- 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 trade entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2139, 1.2126, or 1.2106.
- 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.
- 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 last Thursday that there was a bearish environment in this currency pair, although it was unclear how long this would last for, so I thought that there was no question that short trades look much more likely to succeed than any long trades. This was an OK call, as the price did reject a key resistance level early in the London session, producing some profit from a short trade, although the price later turned around.
The technical picture is quite different now as we see the price advancing strongly to hit a new 2-month high above the former bearish inflective area at around 1.2180. The key thing to watch now is whether the price holds up. If the price can keep reaching new highs today and closes in New York firmly above 1.2180 and rising over the short-term, that would be a bullish sign suggesting we will be likely to see higher prices. I think this is quite likely to happen as there are no key resistance levels for some way overhead, not until 1.2277, so the price certainly has room to rise.
We are seeing general weakness resuming in the USD, and although the euro is not the main gainer, it is relatively firm.
I will not take any trades here until the end of today. If the price closes above 1.2180 I will take a bullish bias for the next 24 hours.
There is nothing of high importance scheduled today concerning either the EUR or the USD.