EUR/USD Daily Price Forecast – 13th February 2025

EUR/USD Daily Price Forecast – 13th February 2025

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Trade Summary:

EURAUD
Buy Stop @ 1.64740
TP @ 1.65121
SL @ 1.63917

Trade Setup Overview

• The provided chart is a 4-hour (H4) timeframe for the EUR/USD currency pair. It includes key trading levels, momentum indicators, and a trading strategy setup. Below is a detailed breakdown of the chart:

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  1. Key Levels and Trading Setup

  • Sell Stop @ 1.04256:
    This is the entry point for a short (sell) trade. A sell stop order is placed below the current market price, indicating that the trader expects the price to drop further once this level is breached.

  • Stop Loss (SL) @ 1.04677:
    The stop loss is set above the entry point to limit potential losses. If the price moves against the trade and reaches this level, the position will automatically close to prevent further losses.

  • Take Profit (TP) @ 1.03983:
    The take profit level is set below the entry point. This is the target price where the trade will automatically close to secure profits if the price moves in the expected direction.

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  2. Momentum and Confirmation

  • The chart includes a momentum indicator, which is used to confirm the strength of the price movement:

    • Momentum Power: 0.00046800:
      This value indicates the current strength of the momentum. While the exact interpretation depends on the indicator’s settings, a positive value suggests bullish momentum, and a negative value suggests bearish momentum.

    • The momentum confirms the trade, but the system is waiting for candlestick confirmation before executing the trade. This ensures that the trade aligns with the overall market sentiment.

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  3. Candlestick Patterns

  • The chart emphasizes the importance of candlestick confirmation before entering a trade. This means the trader is looking for specific candlestick patterns (e.g., bearish engulfing, pin bars, or other reversal patterns) to validate the trade setup.

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  4. Moving Average

  • A green moving average line is visible on the chart:

    • This moving average acts as a dynamic support or resistance level. In this case, the price appears to be interacting with the moving average, which could influence the direction of the trade.

    • The moving average is sloping slightly downward, indicating a bearish trend in the medium term.

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  5. Price Action Analysis

  • Resistance Levels:
    The chart shows resistance levels near 1.04677, where the stop loss is placed. This level has been tested multiple times, suggesting it is a strong resistance zone.

  • Support Levels:
    The take profit level at 1.03983 aligns with a previous support zone. This level is likely to act as a price target where the price may pause or reverse.

  • Current Price Behavior:
    The price is consolidating near the sell stop level, indicating indecision in the market. A breakout below 1.04256 would confirm bearish momentum and trigger the sell stop order.

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  6. Risk-Reward Ratio

  • The distance between the entry point (1.04256) and the stop loss (1.04677) is approximately 42 pips.

  • The distance between the entry point (1.04256) and the take profit (1.03983) is approximately 27 pips.

  • This setup has a risk-reward ratio of approximately 1.5:1, which is slightly below the ideal ratio of 2:1. Traders should evaluate whether this ratio aligns with their risk management strategy.

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  7. Trading Strategy

  • Bearish Bias:
    The setup indicates a bearish bias, with the expectation that the price will break below 1.04256 and continue downward toward 1.03983.

  • Confirmation Required:
    The trade will only be executed if the price breaks below the sell stop level and candlestick confirmation is observed. This reduces the risk of false breakouts.

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  8. Recommendations

  • Wait for Confirmation:
    Ensure that a strong bearish candlestick pattern forms before entering the trade.

  • Monitor Momentum:
    If the momentum weakens or turns positive, reconsider the trade setup.

  • Adjust Risk-Reward:
    Consider adjusting the take profit level to improve the risk-reward ratio if market conditions allow.

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  Conclusion

  This chart presents a well-defined bearish trade setup with clear entry, stop loss, and take profit levels. However, the risk-reward ratio is slightly below optimal, and the trade requires candlestick confirmation to validate the setup. Traders should remain cautious and adhere to their risk management rules while monitoring momentum and price action closely.

Recommended Lot Size

Trading is all about statistics.

While we can experience winning streaks, we can also suffer from losing streaks.

As such, we should always size each trade to withstand losing streaks (if any).

It’s widely recommended that you should not risk more than 2% of your capital for each trade.

We believe it’s easier to control your lot size by limiting your lot sizing to 0.01 for every $500 in your account.

So if you have $5000, then risk no more than 0.10 lot size per trade.

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If you spot a mistake especially when it comes to the price, please use common sense and check the chart.

We wish you good luck and good profit for this trade idea.

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