EUR/USD Forex Signal: Strong Bullish Reversal

Adam Lemon

The new support level at 1.1882 looks pivotal.

Last Thursday’s EUR/USD signals produced a nicely profitable trade entry from the bearish doji hourly candlestick which rejected the resistance level at 1.1882.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken between 8am and 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 1.1908, 1.1922, or 1.1983.
  • 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 1H1 time frame H1H1H1 time frame immediately upon the next touch of 1.1882, 1.1852, 1.1831, or 1.1802.
  • 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 provided the price held below the new resistance level at 1.1856 confluent with previous pivotal support, it was highly likely to make a significant new low today, so I was very comfortable taking a short trade from that level if a firm bearish reversal is printed on the hourly chart.

I thought that we were likely to see new lows over the coming days anyway.

Although the level at 1.1856 did not hold as resistance, the price did indeed move lower over the next couple of days, and the higher resistance level at 1.1882 held nicely, so this was a good call overall.

Friday saw a major bullish reversal in this currency pair at the US non-farm payrolls data release, which saw the price rise strongly from the low at 1.1807. The daily chart saw a strong bullish engulfing pin candlestick form, and the price has been rising and flipping resistance to new higher support ever since.

The key thing to watch today is whether the nearest support level at 1.1882 holds, and 1.1850 below that. If 1.1882 breaks down, we are likely to see a consolidation pattern continue for a while. In the unlikely even that the price gets established below 1.1850, that will be a bearish sign.

We may be seeing new lower resistance forming at 1.1894.

I think it will be best to stand aside from trading this pair for another day and watching what happens in the hope that the technical picture will become clearer.

EUR/USD

Concerning the EUR, there will be a release of ZEW Economic Sentiment data at 10am London time. Regarding the USD, there will be a release of ISM Services PMI data at 3pm.

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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