EUR/USD: Strong Bullish Bounce at 50-Day SMA
Risk 0.75%.
Today's trades can only be made before 5 p.m. London time.
Ideas for Short Trades
- Short after a bearish price action reversal on the H1 timeframe, on the next touch of $1.0766 or $1.0802.
- Set the stop loss one pip above the current swing high.
- Once the trade is 20 pips in profit, move the stop loss to break even.
- When the price reaches 50 pips in profit, take 50% of the position as profit and leave the rest to ride.
Ideas for Long Trades
- Long after a bullish price action reversal on the H1 timeframe and the next touch of $1.0692, $1.0634, or $1.0602.
- Set the stop loss one pip below the current swing low.
- Once the trade is 20 pips in profit, move the stop loss to break even.
- When the price reaches 20 pips in profit, take 50% of the position as profit and leave the rest to ride.
The best way to spot a classic "price action reversal" is for an hourly candle to close with a higher close, such as a pin bar, doji, outside, or even just an engulfing candle. You can profit from these levels or zones by observing the price action that occurs at the specified levels.
EUR/USD Forecast
In my analysis of the EUR/USD currency pair yesterday, I predicted that the pair would consolidate above the $1.07 handle during the London session.
I was incorrect, as the price broke well below $1.07 to reach the 50-day SMA, where it bounced hard and then recovered all of its lost ground. Although it quickly recovered after dropping below that level, I was correct in spirit if not in fact.
Yesterday, the price rose to the nearest resistance level of $1.0766 before reversing. The important thing now is that the price has been gradually but steadily rising in recent hours. Overall, the technical picture suggests that the bullish recovery from yesterday's low will continue, so I believe we will see an up day today.
What moved the price yesterday were Fed Chair Jerome Powell's remarks about inflation (which is falling nicely and will reach 2% in 2024) and rate hikes (which may need to be increased if the data demands it) - it was all about the US Dollar and little about the Euro. The overall effect of Powell's remarks is likely to be a slightly weaker US Dollar, but what is noteworthy is that the US Dollar's bullish momentum appears to have peaked, whereas the Euro remains a relatively strong currency.
I am bullish, but I believe the price will remain between $1.0692 and $1.0766 today, so a scalp off either level could be a good trade - I would prefer a long trade from $1.0692 or even $1.0700.