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Still selling off from yesterday’s spike to above $1.0350.
My previous EUR/USD signal last Thursday not triggered as there was no bearish price action when the key resistance level at $1.0121 was first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be entered between 8am and 5pm London time today.
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0211 or $1.0245.
- 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 50 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0073, $1.0042, or $1.0000.
- 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
In my last analysis of the EUR/USD currency pair on 4th August, I noted that we were seeing strong selling every time the price got near the $1.0300 handle, but also strong buying every time the price approached the $1.0100 area.
This was a good call as the price remained ranging within this area until yesterday’s news about lower-than-expected US inflation sparked a selloff in the US Dollar, sending the price breaking out of its consolidating triangle chart pattern and spiking up to an area above $1.0350.
It is interesting that the spike not only did not last, but that we are seeing the price continue to descend consistently, with the price now trading well below $1.0300 and returning to the area of its medium-term consolidation.
This shows that the Euro is a relatively weak currency, so trading this pair long even when the US Dollar is weak is maybe not a good idea. There are other currency pairs that seem to be working better with Dollar weakness, such as any of the commodity currency pairs such as AUD/USD, NZD/USD, or USD/CAD.
Both the nearest support levels at $1.0250 and $1.0202, as well as the nearest support level at $1.0294, look firm and likely to hold at least for a while when next reached. I think scalping off reversals at any of these levels, especially $1.0250 which looks especially attractive, will be the best strategy to use in trading this pair today.
Concerning the USD, there will be a release of PPI data at 1:30pm London time. There is nothing of high importance scheduled today regarding the EUR.
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