EUR/USD Daily Price Forecast – 18th February 2025

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Trade Summary:

EURUSD
Buy Stop @ 1.04691
TP @ 1.05041
SL @ 1.04424

Detailed Analysis of the EUR/USD H4 Chart

The provided chart is a 4-hour (H4) timeframe for the EUR/USD currency pair. It includes key trading levels, a moving average, and annotations for a potential trade setup. Below is a detailed breakdown of the chart:

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1. Key Levels and Trade Setup

• Buy Stop @ 1.04691:
  This is the entry point for a long (buy) trade. A buy stop order is placed above the current price, indicating that the trader expects the price to rise and break through this level before entering the trade.

• Stop Loss (SL) @ 1.04424:
  The stop-loss level is set below the entry point to limit potential losses. If the price moves against the trade and hits this level, the position will automatically close.

• Take Profit (TP) @ 1.05041:
  The take-profit level is set above the entry point. If the price reaches this level, the trade will close automatically, locking in profits.

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2. Momentum and Confirmation

• The chart includes a momentum indicator, which is used to confirm the trade setup. The annotations suggest that the momentum is aligned with the trade direction, but the trader is waiting for candlestick confirmation before executing the trade. This indicates a cautious approach to ensure the trade aligns with market conditions.

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3. Moving Average

• A green moving average line is plotted on the chart. This is likely a simple or exponential moving average (SMA/EMA), which helps identify the overall trend:

  • The price is currently trading near the moving average, suggesting a potential consolidation phase.

  • If the price moves above the moving average, it could indicate bullish momentum, supporting the buy setup.

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4. Price Action Analysis

• Current Price Behavior:
  The price is hovering near the buy stop level (1.04691), indicating a potential breakout. However, the candlestick patterns around this level will be crucial for confirmation.

• Support and Resistance Levels:

  • Support: The stop-loss level (1.04424) acts as a key support zone. If the price breaks below this level, it could signal bearish momentum.

  • Resistance: The take-profit level (1.05041) represents a resistance zone. If the price reaches this level, it may face selling pressure.

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5. Risk-Reward Ratio

• The distance between the entry point (1.04691) and the stop-loss (1.04424) is approximately 27 pips.

• The distance between the entry point (1.04691) and the take-profit (1.05041) is approximately 35 pips.

• Risk-Reward Ratio:
  The risk-reward ratio is approximately 1:1.3, which is acceptable for many traders. This setup offers a slightly higher potential reward compared to the risk.

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6. Market Context

• Trend: The chart shows a mix of bullish and bearish candles, indicating a period of consolidation or indecision. The breakout above 1.04691 could signal the start of a new bullish trend.

• Round Numbers: The price levels (e.g., 1.04600, 1.04700) are close to round numbers, which often act as psychological support or resistance levels.

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7. Recommendations

• Wait for Confirmation:
  The trader should wait for a strong bullish candlestick close above the buy stop level (1.04691) to confirm the breakout.

• Monitor Momentum:
  Ensure that the momentum indicator continues to support the trade direction before entering.

• Adjust Stop-Loss and Take-Profit:
  If the market conditions change, consider adjusting the stop-loss and take-profit levels to align with new support and resistance zones.

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Conclusion

This chart presents a well-structured trade setup with a clear entry, stop-loss, and take-profit level. The use of momentum and candlestick confirmation adds an extra layer of caution, which is essential in volatile markets. However, traders should remain vigilant for any unexpected market movements and adjust their strategy accordingly.

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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