OIL – Bearish Setup at FVG + Golden Pocket ConfluenceThis 4H chart of Crude Oil Futures highlights a clean bearish setup forming as price approaches a confluence zone of imbalance and premium pricing. After a sharp downward move, the current rally appears to be a retracement into areas of interest for potential distribution.
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1. Context & Market Structure:
- The market experienced a significant bearish move, breaking multiple support levels with conviction.
- Price is currently retracing upward, creating the possibility of a lower high in line with bearish market structure.
- The ongoing move looks corrective, setting up a potential return to the dominant trend.
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2. Fair Value Gaps (FVGs) & Key Supply Zones:
- Two FVGs are identified on the chart — both marked as areas where price moved too quickly, leaving inefficiencies behind.
- The lower FVG overlaps with the 0.618–0.65 Fibonacci golden pocket zone, providing a strong confluence for potential rejection.
- The upper FVG aligns with the 0.786 level, representing deeper premium pricing and added confluence for distribution.
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3. Fibonacci Confluence Zones:
- 0.618–0.65 zone: Coincides with the lower FVG — this is the first area to watch for rejection.
- 0.786 level: Aligns with the upper FVG, making it an extended zone for bearish entries if price pushes higher.
- These Fibonacci levels serve as key retracement zones within the context of bearish continuation.
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4. Anticipated Move:
- The red arrow illustrates the projected path: price reaching into the FVG and golden pocket confluence, then rejecting to the downside.
- The inefficiencies above act as supply zones where institutional selling may occur.
- The lower purple level (0.28) is a potential magnet for price if the retracement completes and bearish momentum resumes.
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5. Trade Idea Narrative:
- This is a classic bearish setup where price retraces into premium and inefficiency zones during a downtrend.
- The ideal reaction would involve a shift in lower timeframe structure once the price hits the golden pocket + FVG zone.
- Patience and confirmation are key — watching for rejection patterns or breakdowns within the FVG before commitment.
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Summary:
Crude Oil is retracing after a sharp drop and is approaching a high-probability reversal zone, where a Fair Value Gap overlaps with the golden pocket. This setup provides a strong narrative for potential bearish continuation, supported by structure, imbalance, and Fibonacci confluence.
