Today’s EUR/USD Signals
- Risk 0.75%.
- Trades may only be entered prior to 5pm London time today.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1810, $1.1840, or $1.1872.
- 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.
- 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.
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Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1766, $1.1760, or $1.1672.
- 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.
- 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
In my previous EUR/USD analysis on Tuesday last week, I thought that the EUR/USD currency pair was likely to make a bullish bounce at one of the deeper support levels. I was wrong, although following this would not have led to any losing trades.
The price has continued to weaken, so it is looking as if the strong rise last week to an area above the big round number at $1.2000 was more of a spike than a solid bullish move.
The Forex market has come to life lately, and this pair is in focus today because the European Central Bank (ECB) is holding a policy meeting. However, it is strongly and widely expected that the ECB will leave its policy rate unchanged at 2.15%. Any surprises about the rate could generate a sharp movement, and the tone taken in the press conference after the announcement, as well as the contents of the ECB’s Monetary Policy Statement, could also move the price, possibly in a way that does not respect technical factors.
Technically, we have seen the price continue to decline over recent days, although it now seems to be bottoming out above $1.1775. Unfortunately, the price area is quite congested with support and resistance levels, making it difficult to judge how the price might move based on technical factors alone.
We are likely to see choppy price action today, so the best opportunity is likely to be fading a spike following the ECB meeting if it happens, with a bullish bounce off $1.1672 a good candidate.