My previous EUR/USD signal on 22nd July was not triggered, as there was no bearish price action at any of the resistance levels when they were first reached.
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 $1.1617, $1.1633, or $1.1668.
- 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 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1515, $1.1499, or $1.1484.
- 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 EUR/USD analysis about two weeks ago, I wrote that the EUR/USD currency pair was in a long-term bullish trend, so I was looking for a long trade from a bounce at a support level. This was a good call insofar as the price rose over the day, but the low was just a few pips above the nearest support level, so my call was not actionable.
The technical picture is quite different now, as last week’s strong fall after hawkish talk from the Federal Reserve boosted the Dollar sent the price tumbling as low as almost $1.1400, invaliding the long-term bullish trend.
We have seen a firm but limited recovery, with the price now trailing off after it got close to the round number of $1.1600. It now seems to be running out of bullish momentum.
The US Dollar has been weakening again after Friday’s poor US economic data release has been digested, with markets now strongly expecting a rate cut of 0.25% at the Fed’s next meeting, in September.
This strengthens the bullish case in terms of fundamentals and sentiment.
Technically, the bullish case is supported too, thanks to the cluster of three support levels closely packed around the round number at $1.1500. If reached, this area is likely to give strong support.
So, I see the best potential opportunity which might set up today as a long trade from a bounce at any of the support levels below $1.1500. The more of the support levels which are rejected, the stronger the trade is likely to be.
There is nothing of high importance due today regarding the Euro. Concerning the USD, there will be a release of ISM Services PMI data at 3pm London time.
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