EUR/USD: 2.5-year low at 1.0879 under threat
Yesterday’s signals may have produced a long trade from the bullish bounce at the support level at 1.0904. This trade would be in a floating loss at the time of writing and looks likely to fail, but if it survives into the London open it may get back to at least break-even. I would not want to be in a long trade in this currency pair yet.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken before 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.0941 or 1.0972.
Put the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.0904 or 1.0865.
Put the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 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.
EUR/USD Analysis
I wrote yesterday that the odds remained in favour of another down day, but bears should beware the 2.5-year low at 1.0879 as well as the key support level just below that at 1.0865, either of which could produce strong profit-taking and a major bullish bounce and retracement.
In fact, it was the support level at 1.0904 and the round number at 1.0900 which produced quite a firm bullish bounce at yesterday’s New York open, pushing up the price to end at a small but significant up day.
However, the price has begun to fall again and at the time of writing it is again testing the support level at 1.0904. The price action looks bearish, and it seems likely that yesterday’s lows and the significant prices below that which I mentioned earlier will again come into play.
We have a long-term bearish trend breaking to significant lows and the odds are still in favour of a further fall. However, if today’s New York close is above 1.0920 and these low close, that would suggest we will not see lower prices for a while, so today is a pivotal today.
I continue to take a bearish bias and to look for short trades following bullish retracements.
Regarding the EUR, there is nothing of high importance due today. Concerning the USD, the Chair of the Federal Reserve will be testifying before Congress at 3pm London time.