Euro Futures Price Prediction with a Short Idea

TradeCompass for Euro FX Futures (6E) – 24 January 2025

Key Insight: Volume Profile Analysis and Naked Levels

This TradeCompass focuses on a short trade strategy for Euro FX Futures (6E), leveraging volume profile analysis to identify high-probability reversal zones. The strategy targets Euro Futures price prediction by identifying key naked levels (untested Value Area Highs/Lows, VWAPs, and Points of Control) that are likely to trigger significant market reactions. This approach caters to both day traders and swing traders looking for actionable setups.

Euro Futures Analysis: Trade Setup Details (Short)

Why This Zone?

• Volume Profile Insights:The price area between 1.05380 and 1.05630 contains naked levels left untested since December 10–18. These include:

  • Untested Value Area Highs (VAH) and Value Area Lows (VAL).
  • VWAP levels and Points of Control (POCs) where significant institutional activity occurred.

• Why Naked Levels Matter:Naked levels are untested zones from prior trading sessions, often attracting institutional activity. When price returns to these levels, it typically sparks reactions from both profit-taking longs and speculative shorts.

• Extended Move Potential:If the price extends into this zone, it may become overbought, leading to exhaustion and reversal. This aligns with the belief that Euro Futures price movements often pivot around high-volume areas.

Position Entry Plan

This plan casts a net in the reversal zone by scaling into the short position:

1. Order 1: Sell 10 units at 1.05380 (light exposure to test the reaction).
2. Order 2: Sell 20 units at 1.05480 (double the size for conviction).
3. Order 3: Sell 30 units at 1.05630 (final position with triple size).

Key Risk and Reward Metrics

• Weighted Average Entry Price: 1.0554 (if all orders are filled).
• Stop-Loss: 1.0580 (just above the identified zone to limit risk).
• First Take Profit: 1.0488.
  • Take off 50% of the position (30 units) here.
  • Adjust stop-loss to the weighted average entry price for the remaining position.

Swing Trade Levels (Further Downside Targets)

For the remaining position (swing shorts), the following volume profile-based levels are targeted:

1. 1.04460: Point of Control from late December.
2. 1.03990: Point of Control from mid-January.
3. 1.03435: Significant profit target for continuation.
4. 1.02735: Value Area Low (January 13).
5. 1.02270: Final profit target near January 13th’s untested Value Area Low.

Euro Futures Price Prediction: Rationale

This plan is not arbitrary and is built on Euro Futures price prediction using volume profile analysis. The identified zone is likely to act as a pivot point, as institutional participants and speculators are expected to react in the following ways:

1. Risk Mitigation by Long Traders:Traders holding long positions from these levels may take profits, reducing buying pressure.
2. Speculative Short Interest:New sellers, anticipating overextension, may enter shorts, amplifying downward pressure.

This strategy aligns with Euro Futures Analysis, focusing on high-probability reversal zones to improve trading precision and profitability.

Final Notes on this Euro Futures Price Prediction

• Volume Profile as the Foundation: This setup leverages the structure of the market, focusing on naked levels where high-probability reactions are likely.
• Scaling into the Position: The Fibonacci-inspired progression balances risk and reward, ensuring optimal entry even if the price doesn’t fully reach the higher levels.
• Partial Profit-Taking for Flexibility: Lock in gains early and hold the remaining position for swing trade opportunities.

This plan provides a clear and actionable framework for both short-term traders and swing traders seeking to capitalize on Euro Futures price movements.

Disclaimer for Euro Traders

This is an opinion, not finacial advice. Trade at your own risk. You may use this for trading educational purposes and/or as an orientation. Visit ForexLive.com for additional views.

This article was written by Itai Levitan at www.forexlive.com.