EUR/USD Signal Today – 05/02: Bearish Price Channel (Chart)

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EUR/USD shows bearish momentum within a price channel, with possible support at $1.0774. Eye short trades at resistance; key levels to watch include $1.0807 and $1.0828, aligning with ISM data release.

My previous EUR/USD signal on 24th January was not triggered as there was insufficiently bearish price action when the resistance levels were first reached that day.

  • Risk 0.75%.
  • Trades must be entered before 5pm London time today.

EUR/USD Signal Today - 05/02: Bearish Price Channel (Graph)

  • Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0807, $1.0828, or $1.0864.
  • 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 20 pips in profit and leave the remainder of the position to run.
  • Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0774, $1.0726, or $1.0653.
  • 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.

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In my previous analysis of the EUR/USD currency pair almost two weeks ago, I wrote that the resistance level at $1.0876 looked likely to be the level which would determine what would happen over the day. That was a good and accurate call, as once bulls overcame that level, the price rose to the next resistance level at $1.0914, before falling.

The technical picture now is notably more bearish, with the price chart below showing that the price is moving down within a wide but symmetrical descending price channel. The symmetry suggests reliability, so the trend lines can be used as likely moving support or resistance.

The price has just made a new 6-week low, but may have found some support, even if it is short term, at $1.0774.

I think the outlook is bearish due to the bearish technical and the resilience in the US Dollar which continues as Fed Chair Powell continues to talk down the prospect of an early rate cut.

I think the best opportunity today in this currency pair will likely be on the short side: either a breakdown once the price gets established below the lower trend line of the descending price channel or following a retracement to the resistance level at $1.0807 followed by a rejection of that level. The logical profit target is $1.0726.

There is nothing of high importance due today regarding the EUR. Concerning the USD, there will be a release of ISM Services PMI data at 3pm London time.  

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