EUR/USD Forex Signal: Finding Support at $1.0900
The technical picture now suggests that the near-term price action will be choppy and hard to trade, as we have seen this kind of movement over recent days, and as we have quite a few support and resistance levels nearby.
Today’s EUR/USD Signals
Risk 0.75%.
Trades must be entered between 8am and 5pm London time today only.
Short Trade Ideas
- Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0943, $1.0960, or $1.0976.
- 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.
- Take off 50% of the position as profit when the price reaches 50 pips in profit and leave the remainder of the position to run.
Long Trade Ideas
- Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0900 or $1.0868.
- 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.
- Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.
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.
EUR/USD Analysis
In my previous analysis of the EUR/USD currency pair, I wrote that we were seeing a consolidation between $1.0910 and $1.1038, with the resistance at $1.1038 looking very strong. I took a weak bearish bias but was ready to trade any reversals at a key level. This was a good call, as the best trade of the day was a long from the support level at $1.0936.
The technical picture has become a little more bearish since then, as we have seen the US Dollar rally and make a bullish breakout from a long-term narrowing wedge chart pattern.
However, it is worth noting that the Euro has held up relatively well against the Dollar compared to other major currencies, so it is showing some relative strength.
The technical picture now suggests that the near-term price action will be choppy and hard to trade, as we have seen this kind of movement over recent days, and as we have quite a few support and resistance levels nearby.
However, the support level confluent with the round number at $1.0900 does look strong, so I think a long scalp from a bullish bounce at this level is likely to be the best opportunity which might set up in this currency pair today.
There is nothing of high importance due today concerning the EUR. Regarding the USD, there will be a release of the FOMC meeting minutes at 7pm London time.
GBP/USD Forex Signal: Recovery Hits Resistance Ahead of FOMC Minutes
The GBP/USD’s moves were less pronounced since the US also published strong retail sales data.
Bearish view
- Sell the GBP/USD pair and set a take-profit at 1.2620.
- Add a stop-loss at 1.2800.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.2750 and a take-profit at 1.2850.
- Add a stop-loss at 1.2650.
The GBP/USD exchange rate was flat on Wednesday morning, a day after the US and UK published strong economic data. The pair was trading at 1.2700, a few points above this month’s low of 1.2622.
Strong UK and US data
The UK published strong economic numbers, signaling that the Bank of England (BoE) will likely need to hike interest rates again in September. The data showed that UK wages accelerated in June, pointing to higher inflation.
The average earnings with bonuses rose by 8.2% in June, higher than the previous month’s 7.2%. This increase was higher than the median estimate of 7.3%. Without bonuses, earnings rose by 7.8% during the month.
These record numbers mean that the Bank of England will find it difficult to lower inflation. Market expectations have now priced in another 0.25% rate hike in the upcoming meeting in September.
The Office of National Statistics (ONS) will publish the latest consumer inflation numbers for July. Economists expect the data to show that the headline inflation dropped to 6.8% in July as the core inflation fell from 6.9% to 6.8%. On Tuesday, data showed that food inflation dropped for the fifth straight month.
The GBP/USD’s moves were less pronounced since the US also published strong retail sales data. In a report, the Commerce Department said that the country’s retail sales rose from 0.3% in June to 0.7% in July. Core sales jumped by 1.0% on a MoM basis.
These numbers signal that the American consumer is doing well, which could see the Fed continue hiking rates in September. The pair will react to the latest building permits, housing starts numbers, and FOMC minutes.
GBP/USD forecast
The GBP/USD pair dropped to a low of 1.2618 on Monday. This was an important level since it was also the lowest swing on August 3rd. The pair is consolidating at the 25-period and 50-period moving averages while the Relative Strength Index (RSI) has formed a bullish divergence pattern.
It remains below the descending trendline that connects the highest point on July 28th. Therefore, the pair will likely resume the downward trend, with the next support level being at 1.2618. A move above the resistance at 1.2751 will point to more upside.
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