Last Tuesday’s EUR/USD signals were not triggered, as neither of the key levels were reached that day.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered 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 1.2202, 1.2213, or 1.2277.
- 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 1.2134, 1.2118, 1.2106, 1.2102, or 1.2091.
- 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 Tuesday that the technical picture had become more bearish, but I also expected that the price of the EUR/USD currency pair would move little before the monthly ECB policy release this Thursday. I was correct about that. All we have seen since Tuesday is a continuation of the longstanding consolidation between about 1.2100 and 1.2240.
With key releases due today for both currencies in this pair, it is likely that we will see some meaningful volatility, but of course it is impossible to say whether there will be much sustained directional movement. Much will depend upon the data.
It is likely that the best approach to trading this pair today will be to wait for the ECB release and then trade reversals from any spikes to extreme levels, and then to closely monitor any trade into the U.S. data release due not long after that.
A short trade from a bearish reversal at 1.2277 or a long trade from a bullish reversal at 1.2102 or 1.2091 both look attractive.
The fact that the price seems to have formed a distributive top near 1.2240 over many days suggests that we are more likely to see a breakdown than a breakout. A technically significant breakdown will happen if the price can get established below 1.2091.
Regarding the EUR, the ECB will be releasing its monetary policy statement and min fefinnancing rate at 12:45pm. Concerning the USD, there will be releases of U.S. CPI (inflation) and unemplyment claims data at 1:30pm.