EUR/USD Forming a Clean Liquidity Trap Before Reversal ?🧠 EUR/USD Short Setup – Sell Limit Plan Breakdown
The recent rally on EUR/USD shows signs of exhaustion, with a potential 5-wave Elliott structure completing on the H4 chart. Price is currently re-testing the 1.1796 – 1.1801 supply zone, where a Sell Limit has been placed in anticipation of a corrective leg down.
📊 Technical Breakdown – Elliott Wave Confluence
Wave III has peaked around the 1.1811 level.
Wave IV was a classic correction with strong displacement to the downside.
Wave V formed a double-top-like structure, failing to close strongly above the previous high → a sign of exhaustion.
The current bullish move is re-testing an Order Block left behind at 1.1796, providing ideal sell-side liquidity for institutional traps.
🔺 Sell Zone: ( 1.17960 – 1.18013 )
📍 Entry: 1.17962
🛑 Stop Loss: 1.18113
🎯 TP Target: 3R – 6R - 10R (targeting the OBS zone around 1.1712 and possibly lower)
🧠 Macro Context – Why This Reversal Makes Sense
The week is packed with red folder news from both the USD and EUR sides. Here's what to expect:
⚠️ Major USD Events:
NFP Jobs Report (Fri): Forecasted at 147K with Unemployment Rate at 4.1% – any surprise can cause USD volatility.
ISM PMI & Powell Speech: Likely to reinforce or challenge rate cut expectations.
⚠️ Key EUR Catalysts:
CPI Flash Estimates: Could hint at the ECB’s next move.
President Lagarde Speeches: Watch for any tone shift after weak Eurozone data.
👉 A hawkish Fed + weak Euro CPI = strong downside potential for EUR/USD.
💡 Why This Trade Setup Makes Sense
Perfect Liquidity Grab Setup: Price is luring breakout buyers at wave V high.
Risk-Reward Ratio: The setup targets 5R – 10R, making it a clean asymmetric opportunity.
Macro Confluence: USD strength likely into the week → ideal for bearish continuation.
Technical OB & Rejection Zone: Supply aligns perfectly with prior imbalance.
⚠️ Trading Notes
Only execute if price taps 1.1796–1.1801 zone cleanly.
Avoid entry during high-impact news — wait for reaction.
Secure partials if price reaches 1.1740 to lock in 2R–3R gains.
