EUR/USD Forex Signal: Price in Wide Consolidation Zone

Adam Lemon

The short-term price action coupled with a generally weak U.S. dollar suggests that the price is moving up again and may rise to test the resistance level at 1.2260.

Yesterday’s signals were not triggered, as the price did not quite reach the resistance level identified at 1.2260, although the high of the day was made just a few pips below that level.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be entered between 8am and 5pm London 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 yesterday that we were unlikely to see new highs today beyond 1.2260 which looked to be a great resistance level at which to seek a short trade.

I thought it was likely to be a down day, so I was looking for short trades. This was a good call as the price fell over the day yesterday.

We see the price now in a wide consolidation zone between the support at 1.2107 and the resistance level at 1.2260.

The short-term price action coupled with a generally weak U.S. dollar suggests that the price is moving up again and may rise to test the resistance level at 1.2260. However, as we have already had a few swings within this area, it is doubtful whether the action will be clean and enough to carry all the way to a price extreme. Therefore, we may get muddled price action today.

I think this wide range is very likely to hold today in the absence of any major news and as markets are likely to quiet down as we approach the Christmas holiday in major markets. Therefore, I will be happy to trade either long or short any reversal from an identified support or resistance level today.

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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