FX.co ★ RubyStone | EUR/USD

EUR/USD Technical Analysis of the EUR/USD Market Trend and Trade Setup Market Structure Analysis

Market Structure The EUR/USD pair on the 5-minute chart exhibits a bullish internal structure following a decisive break of structure (BOS) above the 1.1650 level, shifting momentum from consolidation to upward displacement. This is evidenced by a change of character (CHOCH) where price transitioned from bearish rejections to sustained closes above prior highs, forming higher lows around 1.1640. The broader trend remains upward, with price navigating from discount zones below 1.1640 toward premium areas above 1.1650, supported by increasing volume on green candles. Recent impulses suggest institutional buying, targeting liquidity beyond equal highs, though a minor pullback tests the new support structure. Key Support and Resistance Levels Primary resistance aligns at 1.1650 (recent swing high with multiple tests, now potential supply confluence) and extends to 1.1680 (extended equal high from prior sessions). These levels feature horizontal barriers where sellers previously defended, coinciding with trendline rejections. Support is robust at 1.1640 (broken resistance turned demand, with bullish wicks) and 1.1630 (deeper base aligning with prior lows). Current price at 1.16541 hovers in equilibrium, with price action showing absorption of sell orders at supports, indicating potential for continuation if resistances yield. Liquidity Grabs and Fair Value Gaps Notable liquidity grabs occurred below 1.1640, where sellers swept buy-side stops in a false breakdown, trapping shorts before reversal—a classic inducement for bullish displacement. Above, liquidity pools at equal highs near 1.1650 remain targeted for sweeps. Fair value gaps include a bullish inefficiency between 1.1645 and 1.1650 (recently filled on pullback, signaling balance restoration) and an untested bearish FVG at 1.1625–1.1630 (from earlier drop, prone to upside fill). These imbalances highlight areas of rapid price movement, with the upper gap acting as a pullback target for longs. Order Blocks Bullish order blocks are prominent at 1.1630–1.1640, marked by strong demand candles with minimal wicks, where buyers initiated the BOS rally. Bearish order blocks linger at 1.1655–1.1660, representing premium supply zones from failed upside attempts. These institutional footprints, characterized by high-volume bodies, provide high-probability entries; the lower block offers confluence for dips, while the upper signals short opportunities on retests. Trade Setup Bullish Continuation Setup:Initiate long positions on retracement to 1.1645 (FVG fill), targeting 1.1680 liquidity (1:2.5 risk-reward ratio). Position stop loss below 1.1635 (order block invalidation). This leverages the bullish BOS and support confluence. Bearish Reversal Setup: Enter short on rejection at 1.1655 (bearish order block), aiming for 1.1620 support. Stop loss above 1.1665 (recent high). Ideal for counter-trend if volume fades on upside. Trade Setup Confirmation Validate bullish entries with a bullish engulfing pattern or hammer at support, accompanied by volume expansion and price closing above the FVG high. For bearish, confirm via shooting star or bearish divergence on oscillators (RSI above 70), with decreasing volume on advances. Monitor for structure breaks: downside BOS below 1.1640 invalidates longs. Employ 1% risk management, focusing on multi-timeframe alignment for precision