EUR/USD Forex Signal: Very Bearish Environment

There is a minor bullish retracement after a new 19-year low.

My previous EUR/USD signal on 22nd June was not triggered as there was no bearish price action when the price first reached the resistance level which I had identified at $1.0540.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken prior to 5pm London time today only.

Short Trade Idea

  • Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0280.
  • 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 50 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 $1.0200, $1.0150, $1.0100, or $1.0050.
  • 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

In my last analysis of the EUR/USD currency pair more than two weeks ago, I found it very hard to forecast the likely direction of the price. Things have changed a lot since then, especially over the past two days, which have seen the Euro plummet against the USD. The US Dollar is reaching long-term record highs, while EUR/USD has made new 19-year lows two days in a row.

There is a strong bearish trend.

It is significant that the Euro fell strongly again yesterday, even after most other currencies started to perform better against the USD. This suggests a particular weakness in the Euro.

Technically, there is a very strong long-term bearish trend, and the price is trading in blue sky at levels which have not been reached for many years. Volatility is high. These factors suggest that the odds remain with the bears and that we are most likely to see yet lower prices over the coming days.

We are currently seeing a small bullish retracement which is not unusual. The closest key level is support at $1.0200. If this does not hold up, this will be the first sign of another downwards movement on its way.

The only key support levels I see are potentially at half or whole numbers.

I think the best approach here will remain looking for short trades. A reversal at $1.0280 would be an ideal set up but it may be that the quarter-number at $1.0250 could also be a significant level and produce a firm bearish reversal.

I will not take a long trade in this currency pair today.

EUR/USD

There is nothing of high importance due today regarding either the EUR or the USD, although there will be releases of EU Economic Forecasts and comments from Fed members later which could cause some price movement.

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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