EUR/USD: Pivotal point at 1.1272
Last Thursday’s signals were not triggered, as the bearish price action took place above the resistance level identified at 1.1251.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered 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 1.1321 or 1.1381.
- 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 1.1272 or 1.1155.
- 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.
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 last Thursday that the long-term bullish trend was far from having ended yet.
However due to the ECB’s policy release later that day I thought fading post-release spikes to a key level would be the best strategy.
I was partially right as the price rose strongly following the release, hitting a new 50-day high and closing well above the broken level at 1.1251. The ECB strengthened the Euro by announcing an increase and extension of its coronavirus stimulus program.
The bulls were not able to follow through on Friday. Instead we have seen a bearish retracement, which has strengthened as the price action printed a new lower resistance level at 1.1321.
It is clear that due to a generally weak Dollar, the bullish trend is still not over and technically, everything seems likely to depend upon what will happen if and when the support level at 1.1272 is reached. If it breaks down, we are unlikely to see new highs. If it holds, we could see another strong upwards movement.
For these reasons, I see the best potential set up today as a long trade following a bullish bounce at 1.1272 – I will take a bullish bias if it happens.
Concerning the EUR, the President of the European Central Bank will be testifying before the European Parliament at 2:45pm London time. There is nothing of high importance due today regarding the USD.