EUR/USD Signal- Jan. 6, 2014
EUR/USD Signal Update
Thursday's signal was not triggered and expired. The price cut right through 1.3712 so there was no price action supporting a potential long trade here.
Today’s EUR/USD Signal
Entry should be made between 9am and 5pm London time today only.
Short Trade 1
Enter short at a touch of 1.3715.
Stop loss at 1.3756.
Take the risk off the position at 1.3677 and let the position ride. Take profit rather than moving the stop loss to break even. Take half of the remaining profit at 1.3626.
Short Trade 2
Enter short at the next bar break of an hourly pin or engulfing bar rejecting and closing below the resistance level of 1.3625. If this level is not touched and rejected by the same hourly bar, or if an hourly bar closes more than a few pips above this level, the trade is immediately invalidated and should not be taken.
Stop loss 1 pip below the local swing high.
Move the stop loss to break even when the trade is 40 pips in profit and let the trade ride.
Long Trade 1
Enter long at the next bar break of an hourly pin or engulfing bar rejecting and closing below the resistance level of 1.3488. If this level is not touched and rejected by the same hourly bar, or if an hourly bar closes more than a few pips below this level, the trade is immediately invalidated and should not be taken.
Stop loss 1 pip below the local swing low.
Move the stop loss to break even when the trade is 40 pips in profit. Close the position at 1.3620.
Action in this pair has turned bearish since my previous forecast last Thursday. This could be seen clearly from how we barely got much of a bounce off the support level at 1.3712, which was quickly broken to the downside strongly and easily. On the very next day, exactly the same thing happened at the support level of 1.3617. The ease with which major S/R levels are breached is a great indication of trend strength, so it follows that things are looking pretty bearish. I don’t agree with Christopher Lewis’ more bullish take on events from last Friday.
There is important news today for the USD at 3pm (ISM Non-Manufacturing PMI) London time.
Looking to the future, I am prepared to treat 1.3715 and 1.3625 as likely support turned resistance level, and so to look for shorts off returns to these levels today. The level of 1.3625 is especially interesting as it is confluent with the 23.6% Fibonacci retracement of last year’s low-to-high upwards move. The level of 1.3715 is close to being confluent with a retest of broken bullish trend lines.
Below us there is potential support at 1.3488, and possibly above that at 1.3525 which was the approximate daily low price three times recently. The level at 1.3488 is confluent with a long-term bullish trend line, as well as being near the psychologically key round number of 1.3500, so we are likely to get some kind of a bounce up down there.
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