EUR/USD Forex Signal: Very Bearish Near 2-Month Low

Adam Lemon

Support near 1.2000 breaks down.

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 1.2037, 1.2048, or 1.2091.
  • 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 1.1943, 1.1937, or 1.1922.
  • 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

A couple of days ago I said that as the euro was one of the stronger major currencies, we were likely to see the price break up above 1.2150 and then rise further if it showed initial healthy momentum. This did not happen, but the level at 1.2150 did act as a pivotal barrier, so it was the right level to be watching.

The Forex market today is dominated by yesterday’s FOMC release which upped its forecasts for rate hikes and inflation, sending the USD sharply higher. The big question is whether this will produce a profound change in sentiment in the Forex market and see the USD begin a long-term bullish trend. This currency pair dropped sharply following the release, with the euro one of the weaker currencies. These factors mean that the bearishness is quite likely to persist here with further price falls.

Technically, we see bearish momentum, meaning we are very unlikely to see a strong up day today. The price had begun to bottom out at about 1.2000, but as the London open drew close, it began to make fresh lows below 1.1990. If the price at 9am London time has fallen over the past hour and is below 1.1980, I think we will be likely to see a further fall to at least the next support level at 1.1943, as the former support at about 1.2000 has clearly been invalidated.

Traders should be getting more interested in actively trading the Forex market now as we may be seeing the start of a prolonged movement in major currency pairs after weeks of low volatility consolidation.

EUR/USD

There is nothing of high importance 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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