EUR/USD Forex Signal: Bullish Consolidation Below 1.2260

Adam Lemon

There is a long-term bullish trend, and the price is close to long-term highs and looking somewhat bullish.

Yesterday’s signals were not triggered as none of the key levels identified were reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered before 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 1.2260, 1.2300, or 1.2310.

  • 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 Idea

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2107.

  • Put 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 despite several bullish factors, the price remained well within a consolidative zone until it broke above 1.2260, so a short trade from a reversal at that level remained a valid potential trade.

This was an OK call, as although the price has risen a little over the past 24 hours, it has not quite been able to reach the resistance level I have identified at 1.2260.

Although the price broke bullishly out of the narrowing triangle pattern which I identified within last year’s price chart, the break has not been decisive, and it is possible to redraw the triangle’s upper trend line as still containing the price, as I have within the below price chart.

This leaves the technical picture essentially unchanged. We are still seeing a medium-term consolidation within a wide range between 1.2260 and 1.2106. Furthermore, there are more resistance levels above 1.2260 representing a congested zone which the price is quite likely to struggle to break through. On the other hand, there is a long-term bullish trend, and the price is close to long-term highs and looking somewhat bullish, so a bullish breakout beyond 1.2260 would not be a surprise.

I will take a bullish bias if we get a daily New York close above 1.2268, but I am also ready to take a short trade from a firm bearish reversal if one sets up rejecting 1.2260 later.

EUR/USD chart

There 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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