EUR/USD Signal Update
Yesterday’s signals were not triggered and expired.
Today’s EUR/USD Signals
Risk 0.50%.
Entries must be made before 5pm London time today.
Long Trade
Enter long with a buy limit order at the first touch of 1.3715.
Put a stop loss at 1.3690.
Move the stop loss to break even when the trade is 25 pips in profit. Take off 75% of the position at 1.3770, and leave the remaining 25% to run until Friday’s close for the weekend.
Short Trade
Take a short trade following a next bar break of any bearish pin or engulfing hourly candle that forms after a first touch of 1.3875 and the broken bearish trend line shown in the chart below. After one hour from the close of the first hourly candle that closes above 1.3875, this should not be taken.
Put a stop loss one pip above the local swing high.
Move the stop loss to break even when the trade is 25 pips in profit. Take off 75% of the position at 1.38300, and leave the remaining 25% to run until Friday’s close for the weekend.
EUR/USD Analysis
Yesterday’s forecast was nicely accurate, as I wrote then: “Speaking purely technically, it looks as if the bullish movement has run out of steam and as if we are about to fall down to at least 1.3855 approximately, and possibly lower than that.”
Of course it was the statement from the FOMC yesterday that moved the USD and hence this pair. We fell sharply as low as 1.3808 before getting some kind of bullish bounce this morning. This is not surprising as we have a confluence with a broken bearish trend line and the supportive level of 1.3825 there. The price is now above that level as I write. I was looking for a long there but only during the London session so I have to discount this supportive level for now and only look for a long if we get down to the next level below that at 1.3715. That level is far away enough from the current price to be viable as a touch trade.
We broke down with yesterday’s fall through an “inner” trend line, and it also looks like we will likely have a new resistance turned into support level at 1.3875 which today will be confluent with a retest of this broken inner trend line. I will look to short if we can get a simultaneous rejection from both.
We still have a fairly long-term bullish intact trend line below us that could also provide support.
It is hard to say now what will happen over the coming days. I suspect we will chop around but continue to grind lower, as my colleague Christopher Lewis puts it.
There are no high-impact economic data releases concerning the EUR due today, however there are for the USD. At 12:30pm London time there is Unemployment Claims and at 2pm there are Existing Home Sales and the Philly Fed Manufacturing Index.