Yesterday’s signals produced a profitable short trade from the bearish pin bar on the hourly chart which rejected the resistance level identified at 1.1859.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm 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 1.1865 or 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
Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 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 the short-term price action was suggesting that the rally may be running out of steam, with the nearby area of resistance at 1.1859 looking quite strong naturally. I saw this area (not a precise level) as highly likely to be the day’s pivotal point, with a short trade looking like the most obvious potential set-up. However, support at 1.1843 nearby also looked likely to be strong, so there may not be much downside there.
This was a near-perfect, profitable call, as the price made a bearish reversal at 1.1859 before producing a little more than about 30 pips of profit. Although 1.1843 did not hold as support, I was right that there was no going to be a lot of downside during the day even in the best-case likely bearish scenario.
The picture remains weakly bullish after a typically inconclusive and indecisive Monday trading session. I have adjusted the nearby support up a few pips to 1.1865 and again today I have to emphasise that it is more of an area than a precise level. I think this level will remain pivotal and if the price fails to break above it and again produces a bearish reversal, it could be a good trade. On the other hand, a bullish breakout beyond 1.1865 could see an accelerating upwards movement all the way to 1.1829. Beyond that level, the price really starts to approach long-term highs and the big round number at 1.2000 and things could get very interesting up there.
Concerning the USD, there will be a release of Retail Sales data at 1:30pm London time. There is nothing of high importance scheduled today regarding the EUR.