EUR/USD Signal Update
Last Thursday’s signal to go short on bearish price action following the first touch of the resistance level at 1.3955 was triggered, giving an entry at around 1.3893. Close this trade for profit immediately.
Today’s EUR/USD Signals
Risk 0.75%
Entries may be made only between 8am and 5pm London time today.
Long Trade 1
Go long following confirming bullish price action on the H1 chart following the first touch of 1.3695.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even when the price reaches 1.3740.
Remove 75% of the position as profit at 1.3740and leave the remainder of the position to ride.
Short Trade 1
Go short following confirming bearish price action on the H1 chart following the first touch of 1.3814.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even when the price reaches 1.3780.
Remove 50% of the position as profit at 1.3780 and leave the remainder of the position to run.
EUR/USD Analysis
Things changed dramatically last Thursday when the President of the ECB spoke. The price had been looking very bullish and rose to just a few pips short of the key psychological level of 1.4000, a price which has not been reached since October 2011. The President then made some bearish comments which the market reacted to dramatically. The volatility of this pair has recently been at all-time lows, but following the President’s comments the price fell more in a little over 24 hours than it moved all month during April! During the first hour following the President’s comments, the pair fell almost 100 pips. Usually when this pair moves that fast, it does not follow through, but this time was different which shows the market seems to have had a major change in sentiment. This was a cue to get short by 1.3890 at the latest, and within the next 24 hours or so the price fell all the way to 1.3750, slicing through 2 major supportive trend lines as well as a key supportive level at 1.3814.
It is important to note that the price did turn above the key resistance level I had identified at 1.3955, and also touched a major bearish trend line and the multi-year 50% Fibonacci retracement level.
Overall the picture looks very bearish, however we may have reached some key support at around 1.3750 as it seems the price has bottomed out there for the time being and is even going up a little this morning, as at the time of writing. It is very rare for this pair to fall so straight this far without making some kind of serious pull back and we can probably expect to see such a pull-back right now. This could give another short opportunity if the price reaches 1.3814, which is likely to have become a key resistance level. Alternatively, if we continue to fall, there is key support about 50 pips below a little under 1.3700.
In any case it is quite likely that today will be extremely quiet, as we just had a lot of action, it is Monday, and there are no major news releases scheduled today.
There is no high-impact news due today concerning either the EUR or the USD. It is likely to be a quiet day.