EUR/USD: Second new 50-day high closing price yesterday
Yesterday’s signals were not triggered, as the bearish inside candlestick formation rejecting the resistance level at 1.1251 did not play out until after the London close. This resistance level did cap the high of day quite precisely.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken between 8am and 5pm London time today only.
Short Trade Idea
Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1251.
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 1.1155 or 1.1089.
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.
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 I thought it was likely that the price would continue to rise and reach 1.1250 later before making a bearish retracement. I was interested in buying short-term dips below that level.
This was a perfect call as the price behaved exactly as I predicted, with 1.1251 capping the high of the day and triggering a somewhat deeper bearish retracement once that level had been hit.
The bearish retracement has been reinforced by new strength in the USD everywhere over recent hours. The retracement looks like it has further to go, maybe at least as far as the nearest support level at 1.1155. However, the long-term bullish trend is far from having ended yet.
Normally the still bullish technical picture would make me predict higher prices today as likely, but the European Central Bank will be releasing its monthly police statement later today and this tends to produce volatility and unpredictable price movement.
A good strategy for trading this pair until after the effect of the release plays out will probably be fading any spikes at 1.1251 short or at 1.1155 long, while being quick and careful to take profit as the opportunity comes.
Concerning the EUR, the European Central Bank will be releasing their Monetary Policy Statement and Main Refinancing Rate at 12:45pm London time, followed by the usual press conference half an hour later. There is nothing of high importance due today regarding the USD.