Yesterday’s signals produced a profitable short trade just after the London open when a bearish engulfing candlestick rejected the resistance level identified at 1.2238. It gave about 40 pips of profit and could still be open now.
Today’s EUR/USD Signals
Trades may only be entered before 5pm London time today.
· Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2238.
· 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 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.
I wrote yesterday that despite the long-term bullish trend, these were very bearish signs, and the absence of any key support until the 1.2000 area suggested that the price could still fall much further soon, so I had a short-term bearish bias. This was correct as the price did continue to fall, although the Pound is currently weaker than the Euro, so the drop was stronger in the GBP/USD currency pair. There are some early signs appearing of a bullish pull back, but the picture still looks bearish and there is no reason why the nearest resistance level at 1.2238 would not be good again for another possible short trade entry. I maintain a bearish bias.
There is nothing due today concerning the EUR. Regarding the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time, as well as testimony from the Chair of the Federal Reserve before Congress.