Euro/Dollar. Desired Scenario.
⇒ Warning. Any strategy does not guarantee profit on every trade. Strategy is an algorithm of actions. Any algorithm is a systematic work. Success in trading is to adhere to systematic work.
Full Analysis of EUR/USD Market Based on Volume Price Analytics
Let’s break down the chart in more detail and provide an expanded analysis with a forecast for the development of events in the EUR/USD market based on the chart provided.
1. Overall Market Context
The chart shows the futures market analysis for EUR/USD (6E) on a four-hour time frame (H4). The chart uses volume and level analysis with an emphasis on contract zones, showing the accumulation of volumes by large participants and their impact on price. A strong bearish trend with periodic corrective pullbacks is visible, characteristic of a market in a distribution phase followed by selling.
2. Key Zones on the Chart and Their Significance
Short Accumulation Zone by Contract
This is the area (marked in red) where, according to volume analysis, large participants accumulated short positions. This zone serves as a key resistance level, and when the price moves towards these levels, a renewal of selling can be expected. It is crucial to monitor price reactions at these levels, as they could signal new opportunities for short positions.
Current Contract
The current contract zone shows the trend development based on active market positions. The chart shows that the price broke important support levels and is now in an active selling zone. This indicates strong downward pressure from sellers and suggests further bearish movement.
Area of Strong Short Market Movement
This section highlights an area of aggressive selling, where a sharp downward movement occurred. The high volume in this area indicates significant actions by large players actively selling the asset. In case of a retest of this level, resistance is expected, and a possible resumption of the downward movement.
Order Fixation Zone
This zone is marked as a potential area where large players may take profits, leading to a short-term upward correction. Profit-taking by large participants is often accompanied by a surge in volume and a temporary pause in the downtrend.
Previous Contract
The previous contract zone allows for the analysis of where earlier accumulations occurred and how the price reacted to them. This helps understand the market’s past behavior in similar situations and can serve as a guideline for future expectations.
Strategic Bottom Zone of the Contract
This zone (marked as support) is a level where large participants may begin opening long positions again. It is a key support level where a reversal or significant correction may occur after a deep decline.
Technical Trap for Long Participants
This zone points to a potential area where long positions might get “trapped,” leading to forced liquidation if the downward movement continues. Technical traps often intensify a trend movement when massive liquidation of long positions causes a new downward impulse.
Liquidity Drop
The liquidity drop indicator on the chart signals a decrease in market activity, which could indicate the formation of an accumulation phase before a new movement. Typically, falling liquidity before a strong move is an important signal for potential trend acceleration after recovery.
3. Expected Scenario Development
On the right side of the chart, the anticipated scenario is shown with two targets (Target 1 and Target 2), representing potential levels for short-term corrections:
- Target 1: After a significant price decline, an upward correction towards the order fixation zone is expected. This level could become a short-term resistance point, where selling may resume. At this point, it’s crucial to watch the volumes: if selling volumes remain strong, this would indicate buyer weakness and the potential continuation of the downtrend.
- Target 2: After the first correction, another upward impulse is possible, which could result in a more substantial correction. However, it’s essential to understand that this impulse will still be part of the larger downtrend, and a continuation of the decline is likely after reaching the second target. This correction model (two waves up followed by a drop) is often seen within a larger trend.
The price movement is also depicted with alternating impulses (orange arrows for upward movements, blue arrows for downward), representing a classic wave structure in a corrective market. Most likely, the market will move in this scenario, with sequential pullbacks and continued downward momentum.
4. Forecast and Recommendations
Based on the provided chart and volume-price analysis, the following conclusions can be drawn:
- The current market is under significant selling pressure. After short-term corrections, the market is likely to continue its downward movement.
- The levels marked on the chart as “fixation areas” and “short accumulation zones” will be key points for new selling opportunities. It’s essential to observe the price’s reaction at these levels, particularly in the context of volumes.
- The corrective targets (Target 1 and Target 2) can be used for short-term trades, but the overall trend remains bearish, and further declines are expected after reaching these targets.
- The drop in liquidity may indicate an upcoming sharp movement, which requires careful monitoring of market activity.
Trading Strategy Recommendations:
- Consider opening short positions as the price approaches resistance zones, such as the “short accumulation zone” and “technical trap for long participants.”
- Use Target 1 and Target 2 levels for profit-taking on short positions and for potential short-term long trades during the correction.
- Monitor volume at key levels to confirm the trend’s strength or possible reversal.
Final Forecast: The long-term trend remains bearish. A short-term upward correction is expected, followed by a continuation of the decline.
BT
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