EUR/USD: Strong USD threatens long-term breakdown
Yesterday’s signals produced a profitable short trade from the bearish rejection of 1.1046. As the price is now sitting on the pivotal long-term support level at 1.0993, it would be wise to take partial profit or maybe move the stop loss to break even.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1046 or 1.1100.
Place 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 run.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.0993, 1.0966, or 1.0941.
Place the stop loss 1 pip below the local swing low.
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 run.
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 price was likely to drift lower and retest the big round number at 1.1000 and maybe also the support level at 1.0993.
I was prepared to take a long bias later if we had gotten a strong bullish bounce at 1.1000 or 1.0993.
This was a great call as the price did continue downwards and has now made a bullish bounce from the support at 1.0993 which is an extremely pivotal point due to its position as very long-term support and confluence with the major round number at 1.1000.
The USD is very strong, and the odds are still that in line with the long-term bearish trend the price will break below 1.0993. However, this could be a major low and a turning point which creates the start of a major bullish movement, so the odds until the price gets established below 1.0993 must be in favour of the “long tail” of taking a long trade here.
I would be prepared to take a long trade of we get a strong bullish reaction at 1.0993, or a short trade of we get two consecutive hourly closes below 1.0993 by the time New York has been online for an hour.
Regarding the EUR, the President of the ECB will be testifying before the European Parliament at 8am London time. There is nothing of high importance due concerning the USD.