EUR/USD Forex Signal: Bearish

The FOMC gave new strength to the US dollar.

My Wednesday EUR/USD signal last week was not triggered as there was not enough bearish price action when price first hit the identified resistance level at $1.1352 .

EUR/USD Signals Today

Risk 0.75%.

Transactions can only be entered between 8:00 a.m. and 5:00 p.m. London time today.

  • Short entry following a reversal in bearish price action on the H1 time frame immediately after the next touch of $1.1229, $1.1250 or $1.1261.
  • Put the stop loss 1 pip above the local swing high.
  • Adjust the stop loss to break even once the trade has reached 20 pips of profit.
  • Withdraw 50% of the position as profit when the price reaches 20 pips of profit and let the rest of the position roll.

Long Business Ideas

  • Long entry following a bullish reversal in H1 time frame price action immediately after the next touch of $1.1195 or $1.1155.
  • Put the stop loss 1 pip below the local swing low.
  • Adjust the stop loss to break even once the trade has reached 20 pips of profit.
  • Withdraw 50% of the position as profit when the price reaches 20 pips of profit and let the rest of the position roll.

The best method to identify a classic “price action reversal” is to close an hourly candle, such as a pin bar, doji, outside, or even just an engulfing candle with a higher close. You can exploit these levels or zones by observing the price action that occurs at the given levels.

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EUR/USD analysis

I wrote in my last prediction on the 19thand January that I had no preconceptions about the direction of the day. I was looking to scalp the reversals from $1.1317 or $1.1352. This was a very good move as the price remained mostly within these limits during the London session and it might have been possible to scalp a few pips short of $1.1352 when it was first hit.

The technical picture today is very clear – we have a bearish picture whose immediate trigger is yesterday’s more hawkish than expected policy statement from the US Federal Reserve. The Fed showed it was more concerned about inflation than before and Jerome Powell dodged questions about a faster pace of rate hikes. This boosted US dollar returns and made it a more attractive currency to buy. We have seen the results over the past few hours, with the price falling firmly and cleanly to new lows as it breaks through several likely support levels.

The market may pause or be affected by the leading US GDP data today if the number released is a big surprise. Again it seems highly unlikely that we will see anything other than a strong US dollar today. For this reason, I am looking to take only short positions in the EUR/USD currency pair today.

There are three resistance levels nearby this can give swing traders good opportunities to enter after a retracement and a failed test from below. I see the most attractive level at $1.1250 as it is a key half digit and quarter digit.

EUR/USD

Regarding the USD, there will be a release of Advance GDP data at 1:30 p.m. London time. Nothing very important is planned for the euro.

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