EUR/USD Forex Signal: Wide Bearish Price Channel Holds

Adam Lemon

The price is weakly bearish below 1.1800.

Last Thursday’s EUR/USD signals produced a nicely profitable short trade from the bearish inside candlestick breakdown off the resistance level identified at 1.1850.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time today only.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1801, 1.1823, or 1.1850.
  • 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 1.1772, 1.1754, or 1.1733.
  • 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 strong rejections from the lows should be troubling to bears, but there was no doubt that the price had begun to form a valid and wide bearish price channel. Therefore, I saw the best opportunity likely to set up as a short trade from a bearish reversal which may form at the upper trend line of the bearish price channel shown in the price chart below or at the horizontal resistance level roughly confluent with it at 1.1850.

This was a great call as we got a profitable bearish reversal from 1.1850 as I was watching for.

The price has remained within the bearish price channel and is looking bearish over the short term, too. Although the euro is not one of the relatively weakest major currencies, we do have a strongly risk-off market environment which is producing firm flow into the USD, which is another reason to look for short trades only in this currency pair right now.

I would like to see the price breaking to new lows before taking a bearish bias here, but another alternative is to use the bearish price channel and look for a short trade from the upper half of the channel, such as a bearish reversal which may set up later at 1.1823.

If the price closes today at the New York close below the support level at 1.1771, that would be a bearish sign that lower prices will be likely to happen over the coming days this week.

EUR/USD

There is nothing of high importance due 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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