EUR/USD Forex Signal: Strong Bearish Movement

Adam Lemon

The price has fallen with firm bearish momentum since Wednesday and this begins to call the long-term bullish trend into doubt.

Last Wednesday’s signals were not triggered, as unfortunately, the high of the day was just a few pips below the resistance level I had identified at 1.2354. There was no bullish price action when the support level at 1.2313 was first reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be taken between 8am and 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 1.2193 or 1.2279.

  • 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 Ideas

  • Go long following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2120.

  • 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 outlook was basically bullish as the price had continued to advance slowly and be held within the boundaries of the symmetrical bullish ascending price channel, which was shown in the day’s price chart. This, along with the long-term bullish trend and the fact that the price was making new long-term high prices above 1.2300, were bullish signs.

This was an acceptable though not exactly good call, as the price fell over the day before ending the New York session close to where it opened the London session. I was correct to see 1.2354 as pivotal as the price failed just a few pips below that level, so it was important.

The picture now is considerably more bearish despite the long-term bullish trend and high prices which were reached last week. The U.S. dollar has made quite a strong comeback, receiving some tailwind from Friday’s non-farm payrolls data, which showed some inflationary pressure rising and may result in a less dovish Federal Reserve.

The price has fallen with firm bearish momentum since Wednesday and this begins to call the long-term bullish trend into doubt. However, the likely short-term outcome is one of consolidation with bearish pressure. This means trades might profitably be found at reversals from either support or resistance levels. As the Forex market is quite active, I will be optimistic enough to trade long following a bullish reversal at 1.2120, or from a bearish reversal at 1.2193 or any of the higher resistance levels above that which I have identified.

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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