The EURGBP has fired off a large Bullish Engulfing Bar (BUEB) on the daily price action chart. This BUEB is down at the extreme swing low and is engulfing the previous two candles. Whilst this is a very large engulfing bar, if price does break confirming the BUEB and move higher, it is trading straight back into a kill zone.
The daily chart below shows that price was stuck above a solid support level for a sustained period of time. Price then smashed below this support level and most importantly closed below this level with a huge bearish engulfing bar. This level is now looking to become a new price flip resistance level. I discuss how traders can use these level to great advantage in their trading in the recent guide I published here: The Ultimate Guide to Marking Support and Resistance on Price Action Charts.
This new price flip resistance level is known as a “Kill Zone” where if price does retrace back higher, it could be a potentially high probability area to hunt for short trades on the daily or intraday charts such as the 4hr or 8hr time frames. I discuss in depth what a kill zone is, how to identify them and also how traders can hunt trades using them in the trading lesson here: Trade Forex Like a Sniper and Hunt Your Trades From Kill Zones
For any potential trades, traders need to watch this new kill zone for high probability bearish price action trigger signals. Price action traders are not pattern traders and they don’t simply just look for patterns. Price action traders need to watch this level for signs of whether or not price is going to reject the new price flip resistance or whether it has broken and closed above the level. Not all levels hold and not all levels will have price action signals fired off at them so it is important price action traders remain flexible and ready to pounce when a trade that meets their trading rules and plan is printed off. If you want to learn more about the high probability price action triggers that you can use to make trades at the kill zones or about becoming a confident price action trader check out the Forex School Online Price Action Course.
EURGBP Daily Chart
EURGBP 4hr Chart
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