Yesterday’s signals produced a profitable long trade from 1.1804 to the nearest resistance level at 1.1840 which held to the pip, with an excellent short trade available from the reversal there if monitored on a shorter time frame.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be taken prior to 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 1.1767, 1.1779, 1.1789, 1.1804, or 1.1840.
- 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 1.1741 or 1.1684.
- 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 although it was hard to say whether this consolidation pattern was bullish or bearish, I would take a bearish bias if we saw two consecutive hourly closes below 1.1789. I thought that it may be that the Euro starts to get sold off as the chance that several Eurozone nations will be forced into a second round of economically damaging coronavirus lockdowns seemed to be increasing.
This was a good call although we did not get the break below 1.1789 until the end of the New York session so it did not produce a signal. However, I was right to favour the short side, and also, I was very right about the resistance level at 1.1840 which capped the high of the day practically to the pip.
We are seeing the price break down with strong momentum as it becomes clearer that Eurozone nations will be forced into economically damaging lockdowns or risk seeing their health systems overwhelmed. The Eurozone mostly faces a choice between toughing it out and using militaries to build large field hospitals or imposing tighter restrictions. It is far from clear in fact that this is a binary choice, and this is hurting the Euro right now.
Technically the situation is considerably more bearish as the price breaks below several former support levels and is now threatening 1.1740. The next support level at 1.1684 more or less marks the lower boundary of a multi-month range and a breakdown below this level will be a very bearish sign.
Today I am only looking to the short side, and I will be happy to take a short trade from any firm bearish reversal at any of the resistance levels I have identified above.
There is nothing of high importance due today concerning either the EUR or the USD.