EURUSD has recently reacted strongly to a major resistance zone, where price previously stalled and reversed in the past. After running into this area again, we saw a sharp and immediate rejection, which confirms the presence of aggressive selling pressure. This rejection was not just a weak pullback, but a strong displacement candle that shows real intent from institutional participants.
This kind of price action is typically a sign that the market has found a short-term top, and will now look to rebalance lower, especially if there are inefficiencies left behind during the last move up. With the rejection now confirmed and price starting to rotate lower, the odds increase that we see a deeper retracement in the coming sessions.
Resistance Reaction and Liquidity Story
The price reached into a well-defined supply area and rejected cleanly. This level was likely filled with buy-side liquidity from breakout traders and late longs, which institutions needed in order to fill their sell orders. After sweeping above the previous highs and triggering breakout entries, price snapped back below, creating a shift in short-term structure.
That move also created a market imbalance, a price inefficiency that the market tends to come back and correct. With bullish liquidity absorbed at the highs, price is now looking for sell-side liquidity, which can typically be found below the previous higher lows and inside unfilled value areas.
Fair Value Gap and Fibonacci Confluence
Below the current market, we have a clean fair value gap that was left behind during the most recent impulsive bullish move. What makes this area even more attractive is that it overlaps perfectly with the golden pocket zone, the 0.618 to 0.65 Fibonacci retracement level. This confluence creates a high-probability target area, not just because of the imbalance, but also because this level acts as a common retracement zone where institutional traders often look to reaccumulate or exit short-term positions.
This area is also likely to hold resting liquidity from traders who placed stop losses under recent higher lows. All these factors combined make the fair value gap plus golden pocket area a natural draw for price, the market tends to gravitate toward these zones when there’s unfinished business left behind.
Expectations and Potential Development
Going forward, I expect price to continue bleeding lower in a controlled fashion, possibly forming minor lower highs along the way. Once the fair value gap is reached and filled, we could see signs of support or accumulation, depending on the context at the time. It’s important not to blindly long from that area, but instead wait for a market reaction, ideally a shift in structure on the lower timeframes, to signal that buyers are stepping back in.
If the market holds that area and confirms support, it could launch a new leg higher. However, if the fair value gap fails and price continues to break down, it would signal that this move is not just a retracement but possibly the start of a larger bearish leg.
Conclusion
The rejection from resistance has opened the door for a deeper retracement. With a clear fair value gap and Fibonacci golden pocket below, the market now has a logical destination to correct toward. This level offers a clean narrative for continuation lower, and it aligns with both price action structure and algorithmic models. Patience is key now, the best opportunities come when price delivers into clean zones like this one.
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
___________________________________
Thanks for your support!
If you found this idea helpful or learned something new, drop a like 👍 and leave a comment, I’d love to hear your thoughts! 🚀
This kind of price action is typically a sign that the market has found a short-term top, and will now look to rebalance lower, especially if there are inefficiencies left behind during the last move up. With the rejection now confirmed and price starting to rotate lower, the odds increase that we see a deeper retracement in the coming sessions.
Resistance Reaction and Liquidity Story
The price reached into a well-defined supply area and rejected cleanly. This level was likely filled with buy-side liquidity from breakout traders and late longs, which institutions needed in order to fill their sell orders. After sweeping above the previous highs and triggering breakout entries, price snapped back below, creating a shift in short-term structure.
That move also created a market imbalance, a price inefficiency that the market tends to come back and correct. With bullish liquidity absorbed at the highs, price is now looking for sell-side liquidity, which can typically be found below the previous higher lows and inside unfilled value areas.
Fair Value Gap and Fibonacci Confluence
Below the current market, we have a clean fair value gap that was left behind during the most recent impulsive bullish move. What makes this area even more attractive is that it overlaps perfectly with the golden pocket zone, the 0.618 to 0.65 Fibonacci retracement level. This confluence creates a high-probability target area, not just because of the imbalance, but also because this level acts as a common retracement zone where institutional traders often look to reaccumulate or exit short-term positions.
This area is also likely to hold resting liquidity from traders who placed stop losses under recent higher lows. All these factors combined make the fair value gap plus golden pocket area a natural draw for price, the market tends to gravitate toward these zones when there’s unfinished business left behind.
Expectations and Potential Development
Going forward, I expect price to continue bleeding lower in a controlled fashion, possibly forming minor lower highs along the way. Once the fair value gap is reached and filled, we could see signs of support or accumulation, depending on the context at the time. It’s important not to blindly long from that area, but instead wait for a market reaction, ideally a shift in structure on the lower timeframes, to signal that buyers are stepping back in.
If the market holds that area and confirms support, it could launch a new leg higher. However, if the fair value gap fails and price continues to break down, it would signal that this move is not just a retracement but possibly the start of a larger bearish leg.
Conclusion
The rejection from resistance has opened the door for a deeper retracement. With a clear fair value gap and Fibonacci golden pocket below, the market now has a logical destination to correct toward. This level offers a clean narrative for continuation lower, and it aligns with both price action structure and algorithmic models. Patience is key now, the best opportunities come when price delivers into clean zones like this one.
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
___________________________________
Thanks for your support!
If you found this idea helpful or learned something new, drop a like 👍 and leave a comment, I’d love to hear your thoughts! 🚀
Trade active
Entry hit Trade closed: target reached
Target fully hit
𝟔 𝐘𝐄𝐀𝐑𝐒 𝐄𝐗𝐏𝐄𝐑𝐈𝐄𝐍𝐂𝐄𝐃 𝐓𝐑𝐀𝐃𝐄𝐑
💎 Free Signals
t.me/codeandcandle
🎁 Free trading Discord community
bit.ly/TehThomas
🥇 Best exchange - 20% cashback
bit.ly/BloFin20
💎 Free Signals
t.me/codeandcandle
🎁 Free trading Discord community
bit.ly/TehThomas
🥇 Best exchange - 20% cashback
bit.ly/BloFin20
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
𝟔 𝐘𝐄𝐀𝐑𝐒 𝐄𝐗𝐏𝐄𝐑𝐈𝐄𝐍𝐂𝐄𝐃 𝐓𝐑𝐀𝐃𝐄𝐑
💎 Free Signals
t.me/codeandcandle
🎁 Free trading Discord community
bit.ly/TehThomas
🥇 Best exchange - 20% cashback
bit.ly/BloFin20
💎 Free Signals
t.me/codeandcandle
🎁 Free trading Discord community
bit.ly/TehThomas
🥇 Best exchange - 20% cashback
bit.ly/BloFin20
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.