Weakly Bearish Despite Strong Euro

The US Dollar continues to advance on rising yields.

My previous EUR/USD signal on 11^th April was not triggered, as unfortunately the price did not quite reach the nearest resistance level which I had identified at $1.0937.

Today’s EUR/USD Signals

Risk 0.75%.

Trades must be taken between 8am and 5pm London time today only.

• Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0831 or $1.0937.
• 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.
• Remove 50% of the position as profit when the price reaches 50 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 $1.0710 or $1.0639.
• 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.
• 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.

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EUR/USD Analysis

I wrote on 11^th April that despite the price’s inability to break down, the long-term outlook was bearish, and the trend was clearly downwards, so short trades from clear bearish reversals at $1.0937 continued to look attractive.

This was a good call as the price peaked that day close to $1.0937 and has drifted lower since then.

US Dollar strength has been the standout feature of the Forex market over the past several months, and the pace of the Dollar’s advance has picked up over recent days. However, although the Euro is weak, it will not fall strongly, but just continues to drift lower against the greenback and is prone to sudden bullish retracements. This can make this currency pair challenging to trade short.

Yesterday’s clear victory by sitting French President Emanuel Macron has boosted the Euro as markets have opened this week, but as the Dollar remains relatively strong, we do not see the Euro able to rise much here, and in recent hours it has begun falling again. The recent low at $1.0758 is well within sight, and this is now a near-2-year low.

Scalpers may be interested in trying to take a long trade from a bounce at $1.0710 if it is reached quickly, but trading with the trend will definitely mean a short trade here. As there tend to be such deep bullish retracements, waiting for a rise to $1.0831 followed by a bearish reversal will probably be the best approach for trading short here today. Trading this pair short on breakdowns is not advised in the current climate, as the bearish trend is simply moving too slowly.

There is nothing of high importance due today regarding either the EUR or the USD.