Trading Idea: GBPCAD 1D - Bearish Continuation Setup
In this GBPCAD daily chart analysis, the market structure suggests a bearish continuation setup based on ICT (Inner Circle Trader) concepts. The price has shown signs of rejection at key levels, and we expect further downside as liquidity gets taken out. Here's the detailed breakdown:
Market Structure and CHOCH
The chart shows a Change of Character (CHOCH), which signals a shift in momentum to the downside. This comes after price failed to sustain its bullish structure, breaking below a previous low and confirming the bearish bias. The CHOCH aligns with the expectation of a continuation to lower levels.
Fair Value Gap (FVG) Mitigation
We see price moving into a Fair Value Gap (FVG), highlighted in green, created by the sharp bearish move. This FVG serves as a premium retracement zone where price is likely to find resistance, offering an optimal opportunity for smart money to enter short positions.
Key Levels
Rejection Zone (Highlighted in Orange): Price has already shown a reaction and rejection from this zone, which aligns with previous support turned resistance. This level adds confluence to the bearish setup.
Liquidity Pool: Below the $1.7450 level, significant liquidity rests from retail stop-losses. Price is expected to target this area as it moves lower.
Bearish Bias
The overall bias remains bearish, as the market structure and liquidity principles align for further downside. The retracement into the FVG provides an opportunity for shorts before price continues lower to target liquidity beneath previous lows.
Execution Plan
Entry: Look for short positions in the FVG zone ($1.7700 - $1.7750) or at the rejection zone if price revisits it.
Stop Loss: Place stops above the FVG zone at around $1.7800, protecting against deeper retracements.
Take Profit:
First Target: $1.7450 (Liquidity Pool below the lows)
Extended Target: $1.7200 (Deeper liquidity and historical support)
Confluence for Bearish Setup
CHOCH: Momentum has shifted bearish, confirmed by a break of structure.
FVG: Price is retracing into a premium pricing zone for short entries.
Liquidity Pool: Sell-side liquidity below previous lows provides a magnet for price.
Rejection Zone: Price has already shown a reaction, reinforcing the bearish bias.
Summary
GBPCAD is poised for a bearish continuation as price mitigates the FVG and targets liquidity below. The combination of structure, liquidity principles, and rejection zones suggests a high-probability short setup. Patience for an entry confirmation within the FVG zone will ensure a favorable risk-to-reward ratio.
Disclaimer: This is not financial advice. Always manage your risk and perform your own analysis before executing trades.
Market Structure and CHOCH
The chart shows a Change of Character (CHOCH), which signals a shift in momentum to the downside. This comes after price failed to sustain its bullish structure, breaking below a previous low and confirming the bearish bias. The CHOCH aligns with the expectation of a continuation to lower levels.
Fair Value Gap (FVG) Mitigation
We see price moving into a Fair Value Gap (FVG), highlighted in green, created by the sharp bearish move. This FVG serves as a premium retracement zone where price is likely to find resistance, offering an optimal opportunity for smart money to enter short positions.
Key Levels
Rejection Zone (Highlighted in Orange): Price has already shown a reaction and rejection from this zone, which aligns with previous support turned resistance. This level adds confluence to the bearish setup.
Liquidity Pool: Below the $1.7450 level, significant liquidity rests from retail stop-losses. Price is expected to target this area as it moves lower.
Bearish Bias
The overall bias remains bearish, as the market structure and liquidity principles align for further downside. The retracement into the FVG provides an opportunity for shorts before price continues lower to target liquidity beneath previous lows.
Execution Plan
Entry: Look for short positions in the FVG zone ($1.7700 - $1.7750) or at the rejection zone if price revisits it.
Stop Loss: Place stops above the FVG zone at around $1.7800, protecting against deeper retracements.
Take Profit:
First Target: $1.7450 (Liquidity Pool below the lows)
Extended Target: $1.7200 (Deeper liquidity and historical support)
Confluence for Bearish Setup
CHOCH: Momentum has shifted bearish, confirmed by a break of structure.
FVG: Price is retracing into a premium pricing zone for short entries.
Liquidity Pool: Sell-side liquidity below previous lows provides a magnet for price.
Rejection Zone: Price has already shown a reaction, reinforcing the bearish bias.
Summary
GBPCAD is poised for a bearish continuation as price mitigates the FVG and targets liquidity below. The combination of structure, liquidity principles, and rejection zones suggests a high-probability short setup. Patience for an entry confirmation within the FVG zone will ensure a favorable risk-to-reward ratio.
Disclaimer: This is not financial advice. Always manage your risk and perform your own analysis before executing trades.
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