EUR/USD Forex Signal: Bullish Breakout Fading

Adam Lemon

Volatile and unpredictable price movement is quite likely to happen.

EUR/USD: Support at 1.1371 looks very pivotal

Yesterday’s signals were not triggered, as none of the key levels were reached yet.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered between 8 am and 5 pm London time today.

Short Trade Ideas

  • Short entry at the next touch of 1.1500. 
  • 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

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1371, 1.1321, or 1.1297. 
  • 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.

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EUR/USD Analysis

I wrote yesterday that the price was rising as the London session got underway and looked likely to continue upwards now to either touch or get very close to the major round number at 1.1500.

I was correct about the price getting higher but wrong about 1.1500 getting hit any time soon, as the price made a bearish reversal at 1.1450 and fell back to the 1.1400 area, which it is now trading below.

Technically it looks like we have a medium-term bearish head and shoulders pattern that would complete if the price trades below about 1.1384. There is a key support level close below that, at 1.1371, so that level at 1.1371 is now looking likely to be very pivotal.

The problem with applying technical analysis today is that the European Central Bank will be making its monthly policy input release later, which will then be followed by key U.S. retail sales data. This means volatile, unpredictable price movement is quite likely to happen.

Due to the long-term bullish trend, I see the best approach as likely to be one of going long if the price spikes down after the release and bounces quickly at any of the key support levels identified above.

EUR/USD

Regarding the EUR, the European Central Bank will be releasing its Main Refinancing Rate and Monetary Policy Statement at 12:45pm London time, followed half an hour later by the usual press conference. Concerning the USD, there will be a release of Retail Sales data at 1:30pm.

Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.
Learn more from Adam in his free lessons at FX Academy

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