The EUR/USD currency pair is trading within a chart pattern and showing candlestick price action, both of which are very suggestive that a directional price movement is showing some continuation momentum.
This narrow ranging pattern that has dominated here for the past couple of weeks still might not change, mostly because the US Dollar continues to range as it has for the past year due to the lack of resolution by its key driver – the question of whether Iran and the USA will conclude a peace deal, or whether there will be a resumption of the kinetic war between the two countries and their allies.
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President Trump continues to signal uncertainty over Iran, saying one minute that he expects a deal soon, the next that he will resume the war if Iran refuses. Which begs the question – why does this go on for two months without ever reaching a deadline?
Another potential issue today is the scheduled release of key US economic day in the form of ADP Non-Farm Employment Change forecast, which might move the price.
EUR/USD Technical Analysis
The story of this currency pair today is a pair which may finally be finding direction within a mostly dull Forex market. However, it is hard to say market sentiment or conviction has really changed until we get a bearish breakdown below the obvious and nearest support level at $1.1587. Sentiment is a bit worse as fire is exchanged between Iran and the US and its allies in the Gulf, and the much-touted “good deal” seems far off no matter what President Trump says. This is probably giving the US Dollar a minor but real tailwind today.
Looking at the price chart below, technically we see the price action both completing a bearish head and shoulders pattern and showing some bearish momentum within a descending symmetrical channel which is drawn by the trend lines. These are bearish continuation signs.
The obvious obstacle to substantially lower prices is the obvious support level at $1.1587.
The Euro has not been subject to much interest or controversy, so the other side of the pair has not added much to the mix.
My Take on EUR/USD
The thing to watch here today is whether the price continues to keep up its bearish momentum and makes it to the support level. Then watch how it performs there – I think this is most likely to be today’s pivotal point. I would want the bullish reversal to look very strong before opening a long trade in that area.
Alternatively, a bearish retracement to $1.1638 and a bearish rejection there, especially if that were confluent with the upper trend line of the descending price channel, could also trigger a good short trade entry signal.
Review, Support & Resistance Levels
In my previous EUR/USD analysis on 1st June, I thought that the EUR/USD currency pair was likely to continue to range, which was a good call on as it did.
Risk 0.75%.
Trades may only be taken prior to 5pm London time.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1636, $1.1656, or $1.1667.
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 Idea
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1587.
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 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.
There is nothing of high importance scheduled today concerning the Euro. Regarding the US Dollar, there will be a release of ADP Non-Farm Payrolls Forecast data at !;15pm London time and ISM Services PMI at 3pm.
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