EUR/USD Daily Price Forecast – 20th February 2025

EUR/USD Daily Price Forecast – 20th February 2025

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Trade Summary:

EURUSD
Buy Stop @ 1.04472
TP @ 1.04835
SL @ 1.03979

Detailed Analysis of the EUR/USD H4 Chart

The chart provided 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 analysis:

1. Key Levels and Trading Setup

• Buy Stop @ 1.04472:
  This is the entry point for a long 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.

• Take Profit (TP) @ 1.04835:
  The take-profit level is set at 1.04835, which is the target price where the trader plans to exit the trade with a profit. This level is slightly above the recent highs, suggesting the trader anticipates a continuation of the upward momentum.

• Stop Loss (SL) @ 1.03979:
  The stop-loss level is set at 1.03979, below the recent lows. This is a risk management tool to limit losses if the price moves against the trade.

2. Momentum and Confirmation

• Momentum Power:
  The momentum indicator shows a value of -0.00023275, which is close to zero. This suggests that the market is in a consolidation phase with low momentum. However, the chart notes indicate that momentum confirms the trade, and the trader is waiting for candlestick confirmation.

• Candlestick Confirmation:
  The strategy relies on Japanese candlestick patterns to confirm the trade. The chart mentions that a long trade has been confirmed by candlesticks, signaling the trader to enter the market.

3. Technical Indicators

• Round Levels:
  The chart highlights the importance of round levels (e.g., 1.04000, 1.04500). These levels often act as psychological support or resistance points in the market.

• Moving Average:
  A green moving average line is visible on the chart. This is likely a simple or exponential moving average, which helps identify the overall trend. The price is currently trading above the moving average, indicating a bullish bias.

4. Price Action Analysis

• Recent Price Movement:
  The price has been consolidating near the 1.04400 level, forming a base for a potential breakout. The upward wicks on recent candlesticks suggest buying pressure.

• Breakout Potential:
  The buy stop order at 1.04472 is strategically placed just above the consolidation zone, anticipating a breakout. If the price breaks above this level, it could trigger a bullish rally toward the take-profit level.

5. Risk-Reward Ratio

• Risk:
  The distance between the entry point (1.04472) and the stop-loss (1.03979) is approximately 49.3 pips.

• Reward:
  The distance between the entry point (1.04472) and the take-profit (1.04835) is approximately 36.3 pips.

• Risk-Reward Ratio:
  The risk-reward ratio is approximately 1.36:1, which is slightly below the ideal ratio of 2:1. This suggests that the trade has a moderate level of risk relative to the potential reward.

6. Market Sentiment

• The chart suggests a bullish sentiment, as the price is trading above the moving average, and the setup is for a long trade. However, the low momentum value indicates that the market may need a catalyst (e.g., news or economic data) to trigger the breakout.

7. Recommendations

• Entry Timing:
  Wait for the price to break above the buy stop level (1.04472) with strong bullish candlesticks to confirm the trade.

• Adjustments:
  Consider tightening the stop-loss or moving it to breakeven once the price moves favorably to reduce risk.

• Monitor Momentum:
  Keep an eye on the momentum indicator. If momentum remains weak, the breakout may fail, and the price could reverse.

Conclusion

The chart presents a well-defined trading setup with clear entry, exit, and risk management levels. While the overall bias is bullish, the low momentum suggests caution. Traders should wait for strong confirmation before entering the trade and actively manage the position to mitigate risks.

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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