EURGBP bounce today and why you shouldn't blindly buy oversold RSI

[Owen Sterling 65]

Ngl watching EURGBP bounce today after two straight weeks of getting slammed felt like total deja vu. We just tapped fresh multi-month lows, the daily RSI was completely fried in oversold territory, and suddenly a hotter German CPI print alongside some dollar softness sparked a green candle. If you’ve been trading FX for a minute, you know this exact spot is where so many folks blow up their accounts, either by trying to hero-buy the absolute bottom or by FOMO shorting the exact floor right before profit taking hits.

Early in my trading journey, seeing an oversold daily RSI meant an automatic long trigger for me. The hardest lesson I had to learn the expensive way is that an asset can stay oversold way longer than your account can stay solvent. In a heavy downtrend like the one we're seeing on this pair, these sharp intraday pops are usually just institutional bears banking profits rather than an actual structural trend reversal. The bigger picture is still undeniably heavy.

My rule of thumb for setups like this is simple: never chase the relief bounce, and never marry a counter-trend scalp. If you caught a long off the lows today, lock in those pips and trail your stop aggressively because it can turn on a dime. For everyone else, the cleaner risk-reward is usually waiting for this pullback to exhaust itself near dynamic resistance or previous broken support, then looking for rejection candles to rejoin the prevailing trend with defined risk.

Are you guys looking to fade this bounce once it stalls out, or do you think the euro actually has the legs for a real reversal here?

 

[Noah Vance BR]

Man, preach. People love staring at a 15-minute chart and screaming "oversold!" right into a massive downtrend.

Backtested this exact setup years ago and it’s basically just a donation to the liquidity pool. If your R:R is garbage and you're fighting the macro flow just because RSI is under 30, you're just begging to get stopped out. Glad I stayed flat on this one today.

 

[JulianCraft]

People love staring at a 15-minute chart and screaming "oversold!" right into a massive downtrend.

Spot on, Noah. Retail never learns. They keep trying to catch falling knives while core inflation is still sticky and the ECB is backed into a corner.

With sticky price pressures hanging around globally, central banks aren't going to pivot just to bail out sloppy FX longs. Until the Fed and ECB actually break something major in the credit markets, fighting the macro trend based on a lagging oscillator is just absolute madness. I'm sitting on cash and stacking shorts on any little relief rally.