EUR/USD Forex Signal: Bullish Price Channel Holds

Adam Lemon

It is significant that the dollar is weak, but the euro, unlike the British pound, for example, is not advancing against it.

Last Thursday’s signals were not triggered as there was no bullish price action when either of the support levels at 1.2256 and 1.2234 were first reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered before 5pm London time today.

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2285, 1.2313, or 1.2354.

  • 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 1.2234 or 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 Thursday that there were several bullish signs, as the price was hitting new 2.5-year highs and the dollar was in decline almost everywhere. The price was contained by a symmetrical ascending price channel; however, I also noted that the resistance confluence at 1.2313 may be hard for bulls to break. This was a good call as the price failed just below that level last Thursday.

The picture now is more subtle as the price pulled back quite firmly at the end of last week, breaking below the lower trend line of the aforementioned price channel, which in itself was a bearish sign. However, the price has recovered since the weekly open a few hours ago, and the trend lines of this price channel can be adjusted to contain all the price action while remaining both symmetrical and clearly bullish. This is a bullish sign, but the price is still being held down by the nearest resistance level at 1.2256 and there are two new resistance levels above that price within the bullish price channel. For this reason, I am very doubtful that the bullish price channel will succeed in pushing the price up today.

I see the most potential here as to the downside if the lower trend line breaks down, as the price could then fall all the way to 1.2107 without reaching any key support.

It is also significant that the dollar is weak but the euro, unlike the British pound, for example, is not advancing against it.

I will be prepared to take a bearish bias today if we get two consecutive hourly closes below the lower trend line shown in the price chart below, which is currently sitting at approximately 1.2219.

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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