Euro / U.S. DollarShort
Trading Idea: EUR/USD 4H - Bearish Continuation Setup Using ICT
In this EUR/USD 4-hour chart, we are preparing for a potential bearish continuation setup, utilizing ICT principles to identify high-probability trade opportunities. Here's the breakdown:
Market Structure
The chart shows a prior Break of Market Structure (BMS), confirming a shift in the overall trend to the downside. After this initial displacement, the market has been trending lower, creating a series of lower highs and lower lows, indicating bearish momentum.
Order Block and Fair Value Gap (FVG)
We see a Bearish Order Block, which aligns with a Fair Value Gap (FVG) above the current price level. This imbalance provides a high-probability zone for price to retrace into before continuing to the downside. The FVG and Order Block coincide, adding confluence to this area as a potential point of rejection for further bearish movement.
Liquidity Sweep
There are clear signs of a liquidity sweep during the Asian session, as highlighted on the chart. This sweep is likely to grab liquidity from retail traders' stop-losses, enabling smart money to position itself before driving the market lower. This liquidity grab is a common ICT concept where the market hunts liquidity before continuing in its intended direction.
Bearish Bias
The overall bias remains bearish, with the market likely to revisit the Order Block/FVG zone to mitigate orders before continuing the downward trend. The bullish retracement is expected to be temporary, and we anticipate a rejection in the premium pricing zone.
Execution Plan
Entry: Consider short positions upon price entry into the Order Block/FVG zone.
Stop Loss: Set above the high of the Order Block to protect against a deeper retracement.
Take Profit: Target the previous lows (sell-side liquidity) for an initial take-profit level, with potential for extended targets lower.
Summary
This setup offers a high-probability short trade opportunity based on ICT concepts of market structure, liquidity, and price imbalances. The retracement into the premium zone provides a favorable area for short entries, with a strong risk-to-reward ratio. If price rejects the Order Block/FVG zone, we can expect further downside in line with the prevailing bearish trend.
Market Structure
The chart shows a prior Break of Market Structure (BMS), confirming a shift in the overall trend to the downside. After this initial displacement, the market has been trending lower, creating a series of lower highs and lower lows, indicating bearish momentum.
Order Block and Fair Value Gap (FVG)
We see a Bearish Order Block, which aligns with a Fair Value Gap (FVG) above the current price level. This imbalance provides a high-probability zone for price to retrace into before continuing to the downside. The FVG and Order Block coincide, adding confluence to this area as a potential point of rejection for further bearish movement.
Liquidity Sweep
There are clear signs of a liquidity sweep during the Asian session, as highlighted on the chart. This sweep is likely to grab liquidity from retail traders' stop-losses, enabling smart money to position itself before driving the market lower. This liquidity grab is a common ICT concept where the market hunts liquidity before continuing in its intended direction.
Bearish Bias
The overall bias remains bearish, with the market likely to revisit the Order Block/FVG zone to mitigate orders before continuing the downward trend. The bullish retracement is expected to be temporary, and we anticipate a rejection in the premium pricing zone.
Execution Plan
Entry: Consider short positions upon price entry into the Order Block/FVG zone.
Stop Loss: Set above the high of the Order Block to protect against a deeper retracement.
Take Profit: Target the previous lows (sell-side liquidity) for an initial take-profit level, with potential for extended targets lower.
Summary
This setup offers a high-probability short trade opportunity based on ICT concepts of market structure, liquidity, and price imbalances. The retracement into the premium zone provides a favorable area for short entries, with a strong risk-to-reward ratio. If price rejects the Order Block/FVG zone, we can expect further downside in line with the prevailing bearish trend.
Disclaimer
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