EUR/USD Forex Signal: Bullish Within Consolidation Zone

Adam Lemon

The price action looks bullish, so higher prices over the course of today seem somewhat likely.

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

Today’s EUR/USD Signals

Risk 0.75%.

Trades musts be entered between 8am and 5pm New York time today only.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2260, 1.2300, or 1.2310.

  • Place 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 Idea

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

  • Place 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 last Wednesday that the wide range between 1.2260 and 1.2106 was very likely to hold, and that although the short-term price action was bullish, it was not likely that the price would be able to continue to advance cleanly to reach 1.2260. This was a good, accurate call for that day.

The price remains within the aforementioned wide range, although again, the price action looks bullish so higher prices over the course of today seem somewhat likely.

The dollar is weaker as the week begins due to the fact that President Trump has now signed the new coronavirus stimulus bill into law, which has boosted stocks and other riskier assets against the U.S. dollar. This creates a fundamental environment where the price of this currency pair can rise more easily.

Another bullish factor is that the price seems to be breaking out of a narrowing triangle pattern, as shown in the price chart below. The lower trend line of this triangle seems more clearly defined and stronger than the upper trend line.

Despite these bullish factors, the price remains well within a consolidative zone until it breaks above 1.2260, so a short trade from a reversal at that level remains a valid potential trade.

Liquidity will be very thin until New York opens later.

EUR/USD chart

There is nothing of high importance scheduled today regarding the EUR or the USD. It is a public holiday in the U.K. today so liquidity is likely to be thin before the New York open.

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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