Navigating the Bearish Wave:Unraveling EURUSD's Price Projection
Updated
Analyzing the conditions and influences affecting the EURUSD pair, a thorough assessment of the market trend revealed a shift toward bearish sentiment. This shift led to the overpowering of demand by supply, creating a significant supply order block just above the change in character known as flip OB. To validate its strength, a Fair Value Gap was observed alongside the establishment of the order block. Furthermore,on the same leg of the FVG ,on the lower timeframe, an extreme disequilibrium occurred within a 4HR swing, which explains the propulsion of the first bearish leg with rapid momentum from sell orders.
The price projection indicated a major demand order block (OB) on the weekly timeframe as its next target. The zone was mitigated with a remarkable uniqueness, evidenced by a full -1% candle. In response, the weekly demand OB retaliated with full momentum, reclaiming 60% of the candle's range.
Following this reaction, the price consolidated for six days just above the weekly OB. The main objective during this period was to reach a significant Fractal Order Block (FCTL OB) on the 1-hour timeframe, nested within the massive weekly OB. However, the attempt to mitigate the FCTL OB resulted in a notable weakening of selling power. This created a high concentration of liquidity within and below that price level, generating tension. With the weekly OB mitigated, the untouched 1-hour OB remains, indicating a second opportunity for the price to initiate a move within the current major supply zone it resides in and eventually lead to mitigation.
Partially within this flip supply OB being mitigated, a supply OB was confounded above, representing a healthy level of supply directly above. These two order blocks were partially intertwined, with a common zone of confluence referred to as the Area of Confluence (AOC). This AOC held substantial power as it marked the premium extremities of the main swing prior to the current active one.
As observed, the price initially mitigated the first zone, followed by a correction manifested in three gentle bearish candles. Subsequently, it headed towards the area of confluence. Upon reaching this zone, a candle exhibiting strong robustness indicated that bullish order flow was facing intense selling pressure.
These observations and analysis provide insights into the market dynamics, highlighting the interactions between order blocks, supply and demand, and the future movements of the EURUSD pair.
—Economist Mahdi Kheirddine
The price projection indicated a major demand order block (OB) on the weekly timeframe as its next target. The zone was mitigated with a remarkable uniqueness, evidenced by a full -1% candle. In response, the weekly demand OB retaliated with full momentum, reclaiming 60% of the candle's range.
Following this reaction, the price consolidated for six days just above the weekly OB. The main objective during this period was to reach a significant Fractal Order Block (FCTL OB) on the 1-hour timeframe, nested within the massive weekly OB. However, the attempt to mitigate the FCTL OB resulted in a notable weakening of selling power. This created a high concentration of liquidity within and below that price level, generating tension. With the weekly OB mitigated, the untouched 1-hour OB remains, indicating a second opportunity for the price to initiate a move within the current major supply zone it resides in and eventually lead to mitigation.
Partially within this flip supply OB being mitigated, a supply OB was confounded above, representing a healthy level of supply directly above. These two order blocks were partially intertwined, with a common zone of confluence referred to as the Area of Confluence (AOC). This AOC held substantial power as it marked the premium extremities of the main swing prior to the current active one.
As observed, the price initially mitigated the first zone, followed by a correction manifested in three gentle bearish candles. Subsequently, it headed towards the area of confluence. Upon reaching this zone, a candle exhibiting strong robustness indicated that bullish order flow was facing intense selling pressure.
These observations and analysis provide insights into the market dynamics, highlighting the interactions between order blocks, supply and demand, and the future movements of the EURUSD pair.
—Economist Mahdi Kheirddine
Note
From an economic standpoint, the EURUSD pair encountered renewed downward pressure, leading to a fresh daily low around the 1.0950 level during the New York session on Thursday. The USD received support from hawkish remarks made by FOMC Chairman Powell during the second day of his congressional testimony.To sustain a break above the 1.10 threshold, it may require assistance from weaker US data (such as an increase in claims) or stronger data from Europe (as seen in today's moderately positive INSEE survey).
In the long term, we anticipate a rebound in the Eurozone economy, which should contribute to an upward trajectory for the Euro. However, in the present moment, short-term position adjustments have had a greater influence on EURUSD than any fundamental factors.
Note
From an inversely correlated perspective, the DXY (US Dollar Index) demonstrates a similar opposing price movement. My personal insights, along with Chairman Jerome Powell's statements, indicate a strengthening outlook for the US dollar in the upcoming weeks.These observations suggest a potential alignment between the DXY and the statements made by Chairman Powell, implying that market participants are reacting to his remarks and adjusting their positions accordingly. Such sentiments can influence the short-term dynamics of the US dollar.
However, it is crucial to continue monitoring economic indicators and geopolitical developments, as they can significantly impact the currency markets. Factors such as monetary policy decisions, economic data releases, and global events can shape the future trajectory of the US dollar and its correlative relationship with other currencies.
Note
A bearish market structure has been established on the 4-hour chart, indicating a downward trend for the Euro in the coming week. Additionally, the anticipated order flow for the week is expected to align with the bearish outlook. Furthermore, the US Dollar Index (DXY) is displaying a notable shift in character, indicating bullish sentiment. This development further strengthens the bearish perspective on the Euro from an inversely correlated standpoint. Several key economic news events have the potential to significantly impact the market. These include the release of the ISM Manufacturing/Services PMI, which will provide insights into the performance of the manufacturing and services sectors. The FOMC minutes, shedding light on the Federal Reserve's recent policy discussions can also influence market sentiment. Lastly, the Nonfarm Payrolls report, a highly influential economic indicator, will be closely monitored for signs of employment growth or contraction.
Considering these factors, staying attentive to the market dynamics and potential fluctuations resulting from upcoming news releases is crucial. Monitoring price movements and interpreting order flow in conjunction with these events will provide valuable insights for making informed trading decisions.
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