EURUSD’s technical analysis is no longer bullish. A strong supply imbalance on the monthly timeframe has taken control. Buying EURUSD smaller timeframes is suicidal in this scenario. A new year has started with EURUSD at a strong supply imbalance, where a decent bearish reaction is expected. EURUSD technical analysis using supply and demand imbalances is attached below.
The EURUSD chart for the monthly timeframe is attached below. There are three strong imbalances; the top one is the supply zone that has just gained control. Remember that this is EURUSD monthly chart, it’s a long-term technical analysis that can be used for shorter-term and intraday Forex strategies if you are not a supply and demand trader.
As explained in a previous EURUSD technical analysis, this cross pair has reacted as expected to the bottom demand imbalance located around 1.06. Now, EURUSD is too expensive to buy with a strong imbalance in control. No longs are allowed.
EURUSD could continue to rally further. However, it’s not what usually happens when such a strong imbalance gains control. It’s right at these imbalances where reversals could happen. We are talking about odds. These odds give us an edge. It does not mean that EURUSD could continue to rally higher, eliminating the supply imbalance that is now in control. If you are an intraday Forex trader using smaller timeframes like M5, M15 or even H1 (hourly), those trades must have been losses. Why? Take a look at where the EURUSD Forex cross-pair is located. The monthly chart attached below is self-explanatory.
You can use these imbalances to plan your trades in lower timeframes. Trading is just waiting for the right trigger points and scenarios to present themselves. This game has got a name and it’s called the waiting game. We need to wait for the correct scenarios and setups to happen patiently. And wait for the price to pull back or dip into the price levels we want to trade, in our case. These price levels are made of supply and demand imbalances.
If you want to learn how to trade using our supply and demand trading strategy, join our supply and demand stock trading course.
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