EUR/USD Forex Signal: Strong Bullish Bounce at 50-Day SMA – 08 February 2023
Euro holding up well against firm US Dollar.
My EUR/USD signal yesterday was not triggered, as the bullish price action took place below the support level which I had identified at $1.0766.
Today’s EUR/USD Signals
Trades may only be taken before 5pm London time today.
Short Trade Ideas
Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0766 or $1.0802.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.
Long Trade Ideas
Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0692, $1.0634, or $1.0602.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 analysis yesterday of the EUR/USD currency pair, I thought that we would see consolidation above the $1.07 handle during the London session.
I was wrong about this, as the price broke well below $1.07 to reach the 50-day SMA where it bounced hard and then went on to recover all its lost ground. Although as it bounced back quickly after getting below there, I was correct in spirit if not in fact.
The price rose yesterday to hit the nearest resistance level at $1.0766 before bouncing down again. However, the significant thing now is that the price is gradually but persistently rising over recent hours. Overall, the technical picture points to a bullish recovery continuing after yesterday’s low, so I think we are likely to see an up day today.
What moved the price yesterday was Fed Chair Jerome Powell’s remarks about inflation (its coming down fine and will hit 2% in 2024) and rate hikes (we might need more 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 significant is that the US Dollar’s bullish momentum seems to have run out of steam, while the Euro remains a relatively strong currency. This gives more ammunition to the bullish case here.
I take a bullish bias, but I think that the price will remain between $1.0692 and $1.0766 today, so I think a scalp off either level could be a good trade – I prefer a long trade from $1.0692 or even $1.0700 if there is a bounce at the first touch there.
Regarding the USD, Federal Reserve Member Williams will be interviewed today at 5pm London time. There is nothing of high importance due today concerning the EUR.
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