Are We Heading To 1.40 Before a Heavy Sell-Off ?

This pair is on the cusp of a pivotal higher time frame zone that could trigger hefty selling.

Recall last week's spike? Prices surged, barely grazing the 1.39 mark before tumbling nearly 300 pips by week's end. This week, however, prices have retraced almost entirely, hinting that buyers might be gearing up for a shot at the 1.40 level.

That 1.40 mark is crucial. It's a notch above last year's high at 1.398 and marks the threshold of a weekly SELL/SUPPLY zone—the very one from which the massive 2000 pip sell-off in 2020 originated.

Since that high last year, the price has been ricocheting within a corridor capped by this year's low at 1.31. While I expect this range to persist, it seems we're due for a nudge up to retest last year's high first.

I'm eyeing the sell angle here and will be scouting for signs of momentum loss on the lower time frames—think new highs quickly followed by sharp pullbacks.

I'll also be on the lookout for signals from my TRFX indicator on the 8hr, 12hr, and daily as prices edge past 1.39, tentatively building a long-term position.

There's a chance prices might pierce through 1.40, but I suspect a sustained break above this level is unlikely and could just be a ploy targeting stop losses.

Exiting the trade will involve a holdout until we reach the lower bound of the range near 1.31, with additional positions added on pullbacks.

This setup has solid potential and could unfold over the next few weeks to a couple of months.