EUR/GBP Short Setup: Supply Zone + Valuation OverboughtEUR/GBPOANDA:EURGBPConfluenceEdge_EUR/GBP Short Setup: Supply Zone + Valuation Overbought The Setup Above the current price sits a supply zone between 0.8613 and 0.8640. This isn't just any resistance area — price left this zone with a strong, impulsive leg out. That matters. A forceful departure signals genuine selling pressure, not just a casual test. Zones formed by conviction moves tend to hold on the revisit. The second piece of the puzzle is valuation. The logic is straightforward: a short from a quality supply zone becomes significantly higher-probability when the pair is already stretched to the upside. Zone Quality Leg-outStrong, impulsive ArrivalStrong (long candle required) RatingB (S&D) The Arrival Rule This is the critical filter: price must arrive at the zone with strength — a long, impulsive candle that pushes into the 0.8613–0.8640 area with momentum. A slow grind into the zone doesn't cut it. Weak arrival = weak reaction. Wait for the conviction candle, then act. Macro Context My Macro Dashboard scores EUR/GBP at 0 — dead neutral. No tailwind, no headwind. This trade lives and dies on the technicals, which is exactly what you want: no macro noise to second-guess the setup. Seasonal No relevant seasonal patterns in the window. Ignored. Trade Execution LevelPrice Entry Zone0.8613–0.8632 Stop Loss (tight)> 0.8640 Take Profit (1R) Entry: Start scaling in from 0.8613. The deeper into the zone you get filled, the better the risk/reward. Don't anticipate — wait for price to actually trade inside the zone. Stop Loss — Two Approaches: Tight (1R): Above 0.86396. Clean, mathematical, fixed risk. Best for traders who want defined RR and don't mind getting stopped on a wick. Conservative: Above the pivot high that defines this supply zone. More breathing room, lower risk of a false breakout stop-hunt. Costs you RR but increases win rate. Your call. Take Profit: 1R for the mechanical portion. If price breaks through with momentum, trail the stop and let the rest run — but bank the 1R as the base case. Validity Checklist - Price has entered the supply zone (0.8613) - Valuation indicator reads expensive (> +75) - Arrival candle is long and impulsive (not a slow drift) - No conflicting macro catalyst on the calendar If any of these four is missing, the setup is invalid. Move on. Risk Note: A clean break above 0.8640 with a daily close voids the zone. Don't fight it.