EUR/USD Forex Signal: Consolidation Likely Today

Adam Lemon

The price is close to a key support level at $1.1387.

Last Thursday’s EUR/USD signal was not triggered as there was no bearish price action when the price first reached the resistance level identified at $1.1456.

Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered between 8am and 5pm London time today.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1435 or $1.1451.
  • 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.
  • 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

  • Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1387 or $1.1352.
  • 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.
  • 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 on Thursday last week that it looked like the odds were clearly with the bulls on the long side, due to weakness in the US odllar, but I thought that we were unlikely to see much more of a price rise as I thought that the resistance level at $1.1456 was likely to hold, at least for the short term.

This was not a great call as the price managed to get established above that level and hold there, more or less, for a couple of days.

The technical picture has changed somewhat. We have seen renewed strength in the US dollar over the past 3 days, and this is in line with its long-term bullish trend although recent weeks have seen a pronounced dip in that trend, to the point that the trend begins to be called into question. This dollar strength has pushed the price down.

We now see the price consolidating right on the support level of $1.1387 after having fallen weakly and printed new resistance levels which are quite close by. This suggests that as we have no major data releases today to disturb this situation, we will be likely to see the price consolidate today between $1.1387 and $1.1435 or maybe $1.1451. If I am correct, the best way to trade this currency pair today will be scalping bounces off these levels, most notably a potential long scalp off $1.1387 which could be the first such opportunity today.

I am a little worried there may be more volatility than I expect later after New York opens due to the US returning from yesterday’s public holiday, so scalpers should be cautious around the New York open.

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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