EUR/USD Shorts from 1.05600 back down

Dec 14

This week, my analysis for EUR/USD aligns closely with GBP/USD, as both pairs have exhibited bearish momentum. However, there are subtle differences in price action as we approach the final month of the year. A key focus is the 4-hour supply zone around 1.05600, which initiated a break of structure to the downside.

Once price reaches this area, I’ll look for redistribution on the lower timeframes to confirm a potential sell. If the price moves higher, the 2-hour supply zone just above offers an even better opportunity for shorts.

Confluences for EUR/USD Sells:

- Liquidity Below: Significant downside liquidity remains untapped.

- Bearish Momentum: The pair has been bearish for the past two weeks.

- Break of Structure: Key levels have broken to the downside on the higher timeframe.

- DXY Correlation: The dollar index (DXY) supports this bearish setup.

- Key Supply Zone: The 4-hour supply zone caused the initial bearish move.

Note: If price mitigates the 5-hour demand zone, I may consider a counter-trend buy to take price back up toward the supply zone. However, if this demand zone fails, it will trigger another break of structure (BOS), prompting me to identify a new supply zone for potential shorts.

Stay disciplined and have a strong trading week—let’s close Q4 on a high note!