Yesterday’s signals were not triggered, as there was no bullish price action when the support level identified at 1.2087 was first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 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 1.2100, the bearish trend line shown in the price chart below which is currently sitting at about 1.2138, or 1.2187.
Put 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 1.2058, 1.2039, or 1.2004.
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 it was likely that the price would consolidate between 1.2087 and 1.2187. I was a bit wrong about that, as the price spent considerable time below 1.2087. However, I was right that it would be a bearish sign if the price did break below 1.2087, as we now see a more bearish technical picture dominated by the symmetrical bearish price channel shown in the chart below.
The symmetrical price channel and invalidation of the support level at 1.2087 plus the new lower resistance at 1.2100 gives a more bearish outlook. However, the nearest support level at 1.2058 also looks strong and is confluent with the lower trend line of the price channel.
Due to the fact there is a major data release due today from the ECB, this tight situation is complicated and technical factors will probably not be respected by the volatility at around the time of the release.
There is a long-term bullish trend, but a deep bearish retracement is underway and looks likely to continue.
I am prepared to take a cautious short trade from a bearish reversal at any resistance level after the ECB release, and monitor on shorter time frames.
Regarding the EUR, the ECB will release its Monetary Policy Statement and Main Refinancing Rate at 12:45pm London time, followed 45 minutes later by the usual press conference. An EU economic summit is also taking place today. Concerning the USD, there will be a release of CPI (inflation) data at 1:30pm.