EURUSD – Bearish Rejection and Targeting the 4H Imbalance Zone

May 9

EURUSD has shifted into a clear bearish tone following multiple rejections from a well-established resistance level. Over the past several weeks, price has struggled to break above that zone, showing consistent signs of selling pressure each time it attempted a push higher. The most notable move came when price briefly spiked above the resistance in what now appears to be a fakeout. That move did not hold, and it’s very likely that it served as a classic liquidity grab engineered to sweep buy stops resting above the range highs before reversing direction.

This kind of behavior is typical in a distribution phase, especially when seen at a high-timeframe resistance zone. The fake breakout essentially confirms that the upside liquidity has been taken, and that smart money is shifting direction. Since that event, price has been making lower highs and lower lows, reinforcing the current bearish structure.

Consolidation Structure

Before the fakeout, EURUSD had been consolidating just under resistance, building up a tight range. This kind of structure tends to lure in breakout traders, and the eventual spike above the range likely cleaned out a lot of stop orders. What followed was an aggressive reversal back into the prior range, which is a strong sign that the breakout was not genuine.

Since then, price pushed down and attempted a retracement, but that retracement got rejected precisely within a fair value gap. This is significant. It tells us that even during a pullback, the market is respecting inefficiencies and continues to deliver bearish reactions rather than signs of strength. That rejection further confirms that bears remain in control and that the earlier break was nothing more than a trap.

Bearish Scenario

With resistance holding and the fair value gap rejection now confirmed, I expect EURUSD to continue its descent and seek out deeper levels of interest. The most obvious draw on liquidity now sits below the current price, the large four-hour imbalance zone. This imbalance was left behind during the impulsive rally that preceded the fakeout, and it has yet to be filled.

Inside that imbalance, there’s also a golden pocket level lining up almost perfectly. That confluence between the imbalance zone and the 0.618–0.65 region adds weight to the idea that this area will act as a magnet for price. Markets seek efficiency, and this entire zone represents a void that price is likely to come back and rebalance.

The move into that zone would also allow the market to engineer sell-side liquidity along the way, particularly under the recent higher lows. Once those are swept, and if price begins to react inside the golden pocket, we may then begin to look for early signs of accumulation or even a bullish displacement, but until then, the short bias remains firmly in play.

Price Target and Expectations

The first key expectation is a clean sweep through the current local lows and a drive into the heart of the 4-hour imbalance. This is where I’ll be watching most closely for a potential change in behavior. Ideally, I want to see price push deep into the imbalance and tap the golden pocket before doing anything significant on the long side.

If price shows a strong reaction there, such as a bullish engulfing or a clear market structure shift that would signal the potential for a reversal. Until then, any bounce is likely to be short-lived and corrective in nature. The structure is still bearish, and the fair value gap rejection reinforces that.

Current Stance
Right now, I remain bearish. I’m not interested in fighting this momentum by jumping into premature longs. As long as price remains under the level it got rejected from, and continues to print lower highs, I’ll maintain a sell-the-rip mindset. If price delivers a deeper pullback from here, it may offer a short-term intra-day bounce, but the core expectation is still a move lower into the imbalance zone.

The area that interests me the most is the combination of the 4-hour imbalance and golden pocket, that’s the zone where I’ll shift from reactive to proactive and start looking for possible long setups. But I won’t consider longs unless price gets there and shows clear intent to reverse.

Conclusion

The market has already swept buy-side liquidity with the fakeout above resistance, and the rejection from the fair value gap confirms that sellers are still in control. Price is now being drawn toward the inefficiency below, and all signs point toward a continued bearish move until that imbalance is filled.

Until price reaches that zone and delivers a reaction worth trading, I’m staying patient and waiting for the setup to complete. Chasing entries in the middle of the range here doesn’t offer the best risk-reward. The focus now is on watching how price interacts with the 4-hour imbalance and the golden pocket, that’s where I’ll reassess the narrative and consider shifting bias if conditions warrant it.

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May 11

Trade active

Waiting for the market open now, see how price will react