EUR/USD Forex Signal: First Bearish Retracement

Adam Lemon

The main story today is that after the strong move against the USD which we have seen over the past few days, with the Euro one of the main beneficiaries, we have finally seen what looks to be a high-volatility climax, which suggests the rise is going to be over, at least for a while.

EUR/USD: New 18-month high price again yesterday

Yesterday’s signals produced nicely profitable trades on both the long and short sides, from 1.1685 and 1.1779.

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 following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1779 or 1.1829.
  • 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 1.1685 or 1.1624. 
  • 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.

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EUR/USD Analysis

I wrote yesterday that we were seeing strong price movements in this currency pair and they were worth taking advantage of.

I wanted to take a bullish bias yesterday up to 1.1779 as soon as we got an hourly close above 1.1725.

This was a great call as we got a close just above 1.1725 very early in the London session and the high of the past two days was made almost to the pip at 1.1779. In fact, you could even have taken a short from the bearish reversal there which was also a nicely profitable trade!

The main story today is that after the strong move against the USD which we have seen over the past few days, with the Euro one of the main beneficiaries, we have finally seen what looks to be a high-volatility climax, which suggests the rise is going to be over, at least for a while.

The volatility yesterday was not so high in this currency pair, and this may still be a normal retracement – it is too early to say.

The odds usually would favor new highs being made here over the rest of this week, but the big sell-off in gold and silver put that in doubt.

I am ready today to take a long trade from a bullish bounce at any of the nearby support levels identified above, but I would monitor the trade very carefully and be ready to take a profit quickly.

EUR/USD

There is nothing of high importance due today regarding either the EUR or the USD.

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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