EUR/USD Forex Signal: Bearish Retracement

Adam Lemon

There may be an excellent long-term short trade opportunity setting up from a bearish reversal above 1.1900, ideally at 1.1929.

Yesterday’s signals were not triggered, as none of the key levels were hit during the London session.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be taken prior to 5pm London time today.

Short Trade Idea

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1929.

  • 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

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.1834, 1.1815, 1.1789, or 1.1745.

  • Place the stop loss 1 pip below the local swing low.

  • 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 was generally bullish on this currency pair today, but I doubted that the price would be able to get much above 1.1929. I thought that a bearish reversal there could be a great long-term trading opportunity, at least in terms of reward to risk potential – it would be most likely to be a losing trade.

This was a good call as after initially rising, the price fell back and broke a key support level after the London close, as a more risk-off sentiment began to grip markets later and pushed up the U.S. dollar a little against more relatively risky currencies such as the euro.

The technical picture, apart from the strong resistance beginning near 1.1900, looks messy and mixed. I do not want to make a call on direction today as there are many key support levels close to the current price and mixed price action.

Therefore, I think today’s price movement here will be messy and unpredictable.

The only key takeaway I see from the technical analysis is that there may be an excellent long-term short trade opportunity setting up from a bearish reversal above 1.1900, ideally at 1.1929 – I would be happy to take this trade if it sets up today, but I think it is unlikely to do so.EUR/USDThere is nothing of high importance scheduled 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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