Good day! Today, we’ll talk about an interesting setup on the EURUSD chart.
EURUSD posted a lower high for the first time since February this year.
As you can see, price has been making higher lows and higher highs, indicating a bullish trend. A consolidation pattern was formed after the trend.
The consolidation was pretty significant because of its doji and “doji-esque” formations on the daily heart. Price underwent around eight days of indecision before a bearish power candle broke price out of the consolidation zone.
The market structure has a definite range top and bottom, which appears like an price zone instead of a line that represents a definite price.
Yesterday’s candle ended as a bearish outside candle and posted the first lower high in more than a month at the resistance zone. This may lead to a bearish swing that has lots of room for downward movement.
If you follow proper risk management, a good stop loss for a sell order here is at the outside candle’s high. This way, you can maximize reward for a fixed amount of risk.