EUR/USD Forex Signal: Weakly Bearish

There is a strong support zone above $1.1500.

Last Thursday’s EUR/USD signal was not triggered as there was no bearish price action when either of the given resistance levels were first reached.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be entered before 5pm London time today.

Short Trade Ideas

  • Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of $1.1624, $1.1671, or $1.1688.

  • 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 Ideas

  • Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of $1.1564, $1.1536, or $1.1517.

  • 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.

  • 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.

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 last Thursday that a bearish head and shoulders pattern was close to completing, with the neckline at $1.1574. I was looking for a short trade from either $1.1623 or $1.1668. However, the price pushed up past both resistance levels boosted temporarily by the ECB release that day, before turning bearish again at $1.1688. I was correct about the neckline at $1.1574 as that level continued to hold as support.

The technical picture now is slightly more bearish than it was a week ago even though the price has not moved by a great deal, mainly because the neckline at $1.1574 is no longer supportive.

We have continued though muted USD strength and EUR weakness. The price is not far from long-term lows, but has not yet made a significant bearish breakdown, which will take a daily close below $1.1529 to happen.

Another obstacle for bears is the fact that we have a few support levels sitting above the big round number at $1.1500 and these seem to be giving firm support, so it is unclear how much further the price is ready to fall if there is a breakdown.

I see the best approach today as waiting for the price to get back to $1.1624 and being prepared to trade short from a bearish reversal off that level, but I think this is not very likely to happen.

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.