EUR/USD: Euro is relatively weak
Yesterday’s signals produced a nicely profitable short trade from the bearish rejection of the resistance level identified at 1.1875. As the price is still falling, it is probably worth letting any remainder run for a while.
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
- Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1855 or 1.1875.
- 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 1.1786, 1.1745, or 1.1685.
- 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.
EUR/USD Analysis
I wrote yesterday that the price was continuing to fall and break below a few former support levels, so I did not expect to see any meaningful bullish recovery.
I was ready to take a short trade from any retracement to a resistance level followed by a bearish rejection of the level. I was also prepared to take a long trade from a bullish bounce which might happen at 1.1786.
This was a good call as we got a rejection of 1.1875 which produced a further move down, while the price has not yet reached the support level at 1.1786.
The U.S. Dollar is strong right now, and it is worth noting that it is moving further against the Euro than any other major currency. This suggests that the Euro is relatively weak, and this pair is at the center of the Forex market right now.
The support at 1.1786 is not far away now, and it will be interesting to see what happens when the price gets there, as it probably will today. This looks like quite a strong support level, so I am still prepared to take a long trade if we get a bullish bounce there. The support at 1.1745 also looks likely to be quite strong as it is confluent with the big quarter-number at 1.1750.
Note that the lowest support level shown in the chart at 1.1685 marks the lower boundary of the price range over the past couple of weeks or so. So, this support level also looks likely to be strong.
I think the best opportunity which may set up today will be a long trade from any of the support levels shown following a bullish bounce.
A break below 1.1685 would be a very bearish sign if it happens.
Concerning the USD, there will be a release of ISM Non-Manufacturing PMI data at 3 pm London time. There is nothing of high importance due today regarding the EUR.