EUR/USD Forex Signal: Bullish Consolidation Above $1.0281

Euro is currently one of the strongest major currencies.

My previous EUR/USD signal on 13th October produced a profitable trade from the bullish inside hourly candlestick which rejected the support level I had identified at $0.9643 that day.

Today’s EUR/USD Signals

Risk 0.75%.

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0486, $1.0535, or $1.0601.
  • 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.
  • 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

  • Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0281, $1.0240, or $1.0220.
  • 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.
  • 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 previous analysis of the EUR/USD currency pair on 13th October, I thought that everything would hinge on the US CPI release due later that day. In fact, the price made the bottom of the day before the release, so being ready to take a long trade at that reversal was the best opportunity of the day.

The picture has changed by quite a lot since then, with the price of this currency pair mostly rising since then, and especially over the past week or so since we got lower than expected US inflation data, which has taken some pressure off the Fed and finally allowed the US Dollar to depreciate quite strongly.

On the side of strength, the Euro has been one of the strongest major currencies, although it is not clear there is any good reason for this. However, technically it is very clear that the Euro is showing medium and usually short-term strength.

These developments have made this pair interesting to trade long, especially since the price was able to get established above formerly strong resistance below $1.0400 which now seems to be holding up OK as support.

It is worth noting that the recent rise has been so strong, yesterday saw the price close at a 4-month high. This puts being long of EUR/USD into trend trading territory, but trend traders should note that it is a good idea to wait for a short-term moving average to cross above a long-term moving average – most professional funds use the 50 day and the 100 day, and the 50 day is still below the 100 day, so trend traders might be well advised to wait a while.

Day and swing traders probably have the best opportunities here by waiting for a retracement to the support level at $1.0281, although it is not clear that the price will make it all the way back to this level.

EUR/USD

Concerning the USD, there will be a release of the Philly Fed Manufacturing Index at 9:30am London time.There is nothing of high importance due today concerning the EUR.

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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.

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