EUR/USD Forex Signal: Strongly Bullish Above $1.0894

The technical picture has now become much more bullish, as the lower-than-expected US inflation data last week had the effect of shifting sentiment on the US Dollar to put it into reverse, establishing a new long-term bearish trend. 

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My previous EUR/USD signal on 13th November was not triggered as none of the support or resistance levels were reached that day.

Today’s EUR/USD Signals

Risk 0.75%.

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

Short Trade Ideas

  • Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0945, $1.0960, $1.0976, or $1.1008.
  • 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 $1.0894, $1.0857, or $1.0828.
  • 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 last Monday, I wrote that it may be a very quiet day with low volatility, which turned out to be a correct call. The price did not even reach my nearest support or resistance levels that day.

The technical picture has now become much more bullish, as the lower-than-expected US inflation data last week had the effect of shifting sentiment on the US Dollar to put it into reverse, establishing a new long-term bearish trend. The Euro was one of the major currencies to benefit from this, and so the price here shot up to a multi-month high, and a few days after the start of this strong move, it remains bullish above the nearest support level at $1.0894.

The problem for trend traders on the long side is that the move is very strong and sudden, with the key moving averages not aligned in a bullish way, so we may well need some bearish retracement or consolidation period before the price will move much higher.

It is likely to be a quiet day in the market today as a Monday without any major data releases, so I see a long scalp from $1.0894 as the best potential trade which might set up today. If the bullish bounce also clearly rejects the round number at $1.0900, that would be even better.

EUR/USD

There is nothing of high importance scheduled today concerning either the EUR or the USD.  

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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.