EUR/USD Forex Signal: Resistance at 1.1717 Looks Pivotal

Adam Lemon

The price is recovering firmly from the post-FOMC drop over the short term.

Last week’s Tuesday EUR/USD signal was not triggered as there was no bearish price action when the price first reached 1.1818 that day.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be entered between 8am and 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 1.1717, 1.1754, 1.1769, or 1.1793.

  • Place 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 ride.

Long Trade Idea

  • Long entry immediately upon the next touch of 1.1517.

  • Put 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 week on Tuesday that I was looking for a short trade provided the price remained below 1.1818 and ideally the short entry would come from a bearish reversal at that price level. The price did fall slightly over that day, but the level at 1.1818 was not pivotal when it was reached so it was not a good call.

There is a long-term bearish trend in this currency pair, due mostly to prevailing USD strength and the long-term bullish trend in that currency. However, when the EUR/USD price makes new lows, it tends to make deep bullish retracements. Yesterday’s FOMC release pushed the price down, but recent hours have seen it rebound very firmly, suggesting the EUR has more support at or near long-term lows against the USD than many other currencies.

The key level that stands out within the price chart below is the resistance level at 1.1717. It is likely to be hit today and how the price reacts there should be revealing. A bearish reversal there could be a good short trade, but the price has risen so firmly the reversal will probably need to form over several hours to be effective.

I do not want to take any long trades in this currency pair today.

EUR/USD

Regarding the EUR, there will be releases of German Flash Manufacturing and Services PMI data at 8:30am London time. Concerning the USD, there will be a release of Unemployment Claims data at 1:30pm London time then a release of Flash Manucfacturing and Services PMI data.

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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