EUR/USD Forex Signal: Weakly Bullish Consolidation

Adam Lemon

A bullish breakout looks likely.

Last Thursday’s signals were not triggered, as none of the key support or resistance levels which were identified were reached during that day’s London session.

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 1.2200 or 1.2227.

  • 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 1.2113, 1.2083, or 1.2067.

  • 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 the technical picture looked bullish over the short to medium term, but we still had a confluent resistance level overhead at 1.2154 which looked pivotal.

I thought that the best potential trade in terms of pips would be a short trade from any strong bearish reversal at 1.2154.

This was a pretty good call as the price did rise during the first half of the London session to 1.2149 before falling.

The technical picture now shows a weakly bullish consolidation which is threatening to break up beyond the still-valid key resistance level at 1.2154, although the action is seeming to begin to invalidate it. A bullish breakout looks likely. However, a problem for bulls remains – both the U.S. dollar and the euro are weak – for example, the British pound continues to push ahead to new long-term highs in GBP/USD, but bulls are moving the price up here only by a little. For this reason, I think it makes sense to stand aside from trading this currency pair for the time being and focus instead on the pound and Aussie as strong currencies and the Japanese yen and U.S. dollar as weak currencies.

I take no directional bias, but I see bulls as having a slight edge here.

EUR/USD chart

There is nothing of high impoportance due 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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