EUR/USD Forex Signal: Medium-Term Bullish Trend Continues

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Today’s EUR/USD Signals

Risk 0.75%.

Trades may only be entered prior to 5pm London time today.

Go short following a bearish price action reversal on the H1 time frame immediately upon the next touch of 1.1800, 1.1831, or 1.1855.

Put 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 20 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 time frame immediately upon the next touch of 1.1761 or 1.1705.

Put 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.

EUR/USD Analysis

I wrote yesterday that the key thing to watch for in this currency pair was whether the resistance level at 1.1750 held. I said that if we got two consecutive hourly closes above 1.1750, the price would be likely to continue to rise to at least 1.1800.

This was a reasonably good call as 1.1750 did not hold, was invalidated by choppy price action, and once we finally got two consecutive hourly closes above that level, the price continued to advance slowly. The price is now 8 pips higher than the entry point – nothing huge, but its better than a loss.

We see the technical picture now looking somewhat more bullish as not only has 1.1750 broken, but there is also a new higher pivotal flipped support level at 1.1761. If this support level holds up, we are likely to see continued upwards movement to 1.1800 and maybe beyond.

The round number at 1.1800 may prove to be resistant, and the next level above that – 1.1855 – is confluent with a long-term price channel trend line, so that could be a major zone to trigger a bearish reversal.

It is likely that we will some much higher volatility and directional price movement in this currency pair today when some word from the Fed emerges from the Jackson Hole Symposium about QE tapering timing.

I am happy to take a long trade from a bullish bounce at 1.1761 or a short trade from a bearish reversal at either 1.1800 or 1.1855.

Concerning the USD, there will be a release of preliminary GDP data at 1:30pm London time, while the Jackson Hole Symposium will be taking place all day. There is nothing of high importance scheduled today regarding the Euro.

Asian Open: Dollar Higher on Fed Hawk Banter, Equities Lower

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Asian Futures:

Australia’s ASX 200 futures are down -7 points (-0.09%), the cash market is currently estimated to open at 7,484.20

Japan’s Nikkei 225 futures are down -40 points (-0.14%), the cash market is currently estimated to open at 27,702.29

Hong Kong’s Hang Seng futures are down -14 points (-0.06%), the cash market is currently estimated to open at 25,401.69

UK and Europe:

UK’s FTSE 100 index fell -25.14 points (-0.35%) to close at 7,124.98

Europe’s Euro STOXX 50 index fell -11.25 points (-0.27%) to close at 4,169.87

Germany’s DAX index fell -67.04 points (-0.42%) to close at 15,793.62

France’s CAC 40 index fell -10.45 points (-0.16%) to close at 6,666.03

Thursday US Close:

The Dow Jones Industrial rose 192.38 points (0.54%) to close at 35,213.12

The S&P 500 index fell -26.19 points (-0.59%) to close at 4,470.00

The Nasdaq 100 index fell -90.4 points (-0.59%) to close at 15,278.52

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US indices lower, ASX seen an interim top?

A combination of economic data and Fed members reiterating their hawkish views kept hopes of tapering alive overnight.

Employment claims were slightly mixed, with initial claims rising slightly by +4k yet continuing claims fell -3k. By historical standards these weekly changes are negligible, and retain the bigger picture view that employment claims are at or near 17-month lows.

Q2 GDP was upwardly revised by 0.1 percentage points to 6.6% QoQ (annualised) from 6.5%, although this was slightly below the 6.7% consensus. Consumer spending also beat expectations to rise 11.9%. All in all, data overnight was good decent enough and therefore not likely to change the Fed’s course of direction for Jerome Powell’s speech at midnight.

Therefore, the consensus remains for the Fed to announce tapering today, and that weighed on equity markets. All three large cap indices fell from their highs around -0.6%. The 10 of the 11 S&P 500 sectors closed lower, led by energy and consumer discretionary stocks, real estate investment trust sector was the only one to close marginally higher (+0.06%).

The VIX rose to a four-day high before settling at 18.84 as traders hedged exposure ahead of Powell’s speech.

The ASX 200 broke a three-day countertrend rally with a bearish engulfing candle. It formed around the 50% retracement level to suggest the corrective high was seen on Wednesday, although we could also use the 61.8% Fibonacci level to allow extra wiggle room for any potential volatility. The support zone around 7430/50 makes a viable interim bearish target, alongside the bullish trendline. If it reaches such levels we can reassess its potential to revert to the longer-term bullish trend.

ASX 200 Market Internals:

ASX 200: 7491.2 (-0.54%), 26 August 2021

Telecomm Services (0.56%) was the strongest sector and Utilities (-2.24%) was the weakest

2 out of the 11 sectors closed higher

10 out of the 11 sectors closed lower

5 out of the 11 sectors outperformed the index

61 (30.50%) stocks advanced, 131 (65.50%) stocks declined

69% of stocks closed above their 200-day average

87% of stocks closed above their 50-day average

55% of stocks closed above their 20-day average

Outperformers:

Underperformers:

-21.42% - Appen Ltd (APX.AX)

-12.62% - Link Administration Holdings Ltd (LNK.AX)

-11.81% - A2 Milk Company Ltd (A2M.AX)

Forex: USD and JPY strongest majors

The US dollar was the strongest major, which saw the dollar index (DXY) form a bullish engulfing candle as part of the three-day bearish reversal pattern (morning star reversal). From here it appears dollar bulls are simply waiting for the green light from Powell to confirm tapering. The yen a close second as traders presumably used it as a hedge ahead of tonight’s event

EUR/USD respected a tight one of resistance around 1.1780 which comprises of the monthly S1 and weekly R1 pivots.

AUD/USD printed a bearish engulfing candle as part of a two-bar reversal below the 73c resistance cluster. Our bias remains bearish beneath that key level, so we’re waiting for momentum to fully realign with its bearish trend.

AUD/NZD is probing its 16-month low ahead of the release so may be a good cross to monitor around retail sales as it is effectively shielded from the Jerome Powell hype.

Jerome Powell is scheduled to deliver his keynote speech midnight AEST (15:00 BST), which is the event of the day, week and month. Although Australian retail sales is released at 11:30 and expected to have fallen -2.3% in July, down from -1.8% as lockdowns have been extended and more stringent measures imposed.

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Commodities:

Gold prices were flat and formed a Rikshaw Man Doji on the daily chart. This places a higher low at 1778.90, although bulls now need to break trend resistance and the 200-day eMA to get their trend going. A break beneath 1773.20 assumes gold has topped.

Silver printed a bearish outside day after its recent rebound failed to reach the 24.0 resistance level. And it remains our preferred short bias over gold, should tapering be confirmed.

WTI printed a slightly bearish inside day (and Doji). We don’t need to read too much into this though as it’s clearly waiting for Powell to hit the wires at midnight.

Up Next (Times in AEST)

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

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Latest Bitcoin price and analysis (BTC to USD)

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Bitcoin is currently trading back above the psychological level of resistance at $50,000 following a tremendous 72.91% surge over the past month.

The world’s largest cryptocurrency is now eyeing up the historical levels of resistance at $50,500, $51,200 and $52,300 as speculation mounts over whether this is a bullish reversal or a gruelling bull trap.

Both scenarios carry weight, with the chart displaying various signs of strength, including a bullish weekly MACD cross, an exponential moving average golden cross and an expansion in volatility.

In terms of a potential bull trap, the lack of trade volume compared to January’s rally is telling. It suggests that retail involvement in the move has been far less significant, and that the hike in price is a result of a lack of sell-side liquidity.

BTCUSD chart by TradingView

This means that when Bitcoin approaches a level where miners and traders begin to sell, the move to the downside will be more violent as supply will outweigh the below-par levels of demand.

In order for a bull trap to play out, open interest will need to rise alongside leveraged long positions above $50,000 as this would provide fuel for a move back to the $40,000 mark.

Bitcoin’s apparent rise from the ashes has had a subsequent impact on the entire cryptocurrency market, with the likes of Cardano, Ethereum and even Dogecoin all enjoying momentous rallies over the past month.

For more news, guides and cryptocurrency analysis, click here.

Bitcoin pricing

Current live BTC pricing information and interactive charts are available on our site 24 hours a day. The ticker bar at the bottom of every page on our site has the latest Bitcoin price. Pricing is also available in a range of different currency equivalents:

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About Bitcoin

In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.

Story continues

The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On January 3 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.

More BTC news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.