EUR/USD Forex Signal: Strong Bearish Move Continues

Adam Lemon

The price is trading near 1-year lows below $1.1338.

Last Thursday’s EUR/USD signal was not triggered as the bearish price action took place slightly above the resistance level I had identified at $1.1467.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be entered 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 $1.1338, $1.1371, or $1.1394.

  • 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.

  • 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 $1.1245 or $1.1195.

  • 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.

  • 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 after making a daily (New York) close below $1.1529, the price was continuing to fall strongly to new 1-year lows. I thought that the price now had room to fall all the way to the next round number at $1.1400 without encountering any support, and that the day was very likely to be a down day.

This was an excellent call and my bearish bias paid off, although it did take a little longer than I expected for the price to reach $1.1400. Last Thursday was also a down day, as I had forecast.

The price made a strong downwards push during yesterday’s Asian session and reached close to $1.1250 before making quite a strong bounce. This meant that on some price charts, depending upon the time zone used, yesterday’s daily candlestick will appear as a bullish pin bar. While it is possible that we may see a move higher today, do not be fooled by this pin bar – the real test now is whether the nearest resistance level at $1.1338 will hold.

There still seems to be bearish momentum provided the price is below $1.1338, which it is now, so I still expect to see lower prices today and over the course of the coming days.

The US dollar has made a small recovery, but is holding above key support, and the euro remains weak after the ECB appeared to rule out a rate hike in 2022. It seems the euro is the key driver in this pair, but the long-term bullish trend in the US dollar certainly helps the bearish case here.

I maintain a bearish bias and continue to see a short trade opportunity here. The best set-up would be a firm bearish rejection of the resistance level at $1.1338.

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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