US Dollar strong but held by resistance.
My EUR/USD signal on 21st February was not triggered, as there was no bullish price action when the support level at $1.0662 was first reached.
Risk 0.75%.
Trades may only be taken before 5pm London time today.
- Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0732.
- 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 50 pips in profit and leave the remainder of the position to ride.
- Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0636 or $1.0568.
- 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.
In my previous analysis of the EUR/USD currency pair, I thought the support at $1.0662 was likely to be the day’s pivotal point – if it broke down convincingly, I expected the price could fall quickly to the next support level below it at $1.0602.
This was a fairly good call, as the level broke and the price reached $1.0602 the next day, but it took quite a few hours and some deep pullbacks before that happened.
Yesterday saw the Euro show considerable strength and advance against the Dollar for a few hours before it sold off again.
Technically, the price is at an interesting point right now, as it is trying to break below what looks likely to be pivotal support at $1.0636.
If we get two consecutive lower hourly closes below $1.0636, that will indicate a further fall is likely. However, there are two problems with this: firstly, there is key Eurozone inflation forecast data due, which could cause volatility if it differs from the expected annualized rate of 8.3%; secondly, the US Dollar Index faces strong resistance so may not be able to rise much further.
For these reasons, I think the best approach to trading this currency pair today would be for a short term, scalp style short trade following a breakdown of $1.0636, but only targeting the next support level at $1.0568.
If the price fails to breakdown below $1.0636, we could see another strong upwards price movement, but I think it would again be likely to fade away very quickly, like it did yesterday.
Regarding the EUR, there will be a release of Eurozone Flash Estimate CPI data at 10am London time. There is nothing of high importance due today concerning the USD.
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