EUR/USD Forex Signal: Distributive Top Forming?

Adam Lemon

The dollar is beginning to gain some ground against the euro.

Last Thursday’s EUR/USD signals were not triggered, as there was no bullish price action when the support levels at 1.2129 and 1.2126 were first reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.2202, 1.2213, or 1.2277.
  • Put the stop loss 1 pip above the local swing high.
  • Adjust the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 1.2134, 1.2118, 1.2106, or 1.2102.
  • Put the stop loss 1 pip below the local swing low.
  • Adjust the stop loss to break even once the trade is 20 pips in profit.
  • Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

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 we were seeing a wide technical area of consolidation between 1.2277 and 1.2129.

I expected that this consolidation would continue and saw the best approach for the day here as trading reversals from either 1.2277 or 1.2129 if they set up.

My forecast was a little off, as the price fell quite sharply to briefly trade below the lower boundary which I had identified at 1.2129.

The technical picture now is more bearish, as the price chart shows the recent days seem to have presented a bearish distributive pattern around 1.2250, with a succession of lower highs and lows. The most recent lower high is the bearish turn at 1.2202 which took place a few hours ago.

The U.S. dollar is slowly beginning to gain ground against the euro, but as the market is awaiting the monthly ECB policy release this Thursday, it is likely that the euro will not move much this week before then.

Trading this pair looks likely to be somewhat dangerous, with the safest potential trade likely to be another bearish reversal at 1.2202, if it sets up soon, as this would be sufficiently in harmony with the recent pattern of bearish waves.

Overall, today’s direction looks difficult to predict, as the price may be sitting on a support level right now at the time of writing at 1.2178.

EUR/USD

There is nothing of high importance scheduled for today concerning 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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