EUR/USD – Deeper Drop Into Daily Buy Zone
Today EUR/USD has dropped deeper into the daily buy zone which the market first entered back on the 16th September.
You can see the market did actually end up breaking through the low I said to watch in yesterday’s post and from there it continued to decline until it broken through the low of the retracement which began on the 16th September. Based on where the market currently is I think when the FOMC news gets released we’ll see EUR/USD rise out of the buy zone back towards the daily sell zone that has caused this whole move down to take place.
If the FOMC comes out makes USD stronger, I think the market will drop down to the daily demand zone you can see on the daily chart. For now I think it’s best if we wait to see what happens after the FOMC is released.
USD/JPY – Buy Zone Broken By Large Drop
The buy zone which the market has been bouncing off the past couple of weeks has been broken today due to the Bank Of Japan saying there going to abandon their monetary base target.
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The market was already inside the buy zone when the news came out, when it was released the market initially made a sharp move down but it quickly recovered to end the hour heavily bullish. At this point it looked like the buy zone had worked and I thought we was about to see the market make a strong move higher, this obviously wasn’t the case and it didn’t take long for the market to rapidly begin falling lower.
Since the buy zone has now been broken it means the idea the banks were getting buy trades placed at the swing lows which formed when the market fell into zone is invalid. Our new point of interest is the daily demand zone which you can see is just below the current market price. With the FOMC coming out in a couple of hours I do think a drop into the daily demand zone is likely to take place but I doubt we’ll see any reversal signals appear inside the demand zone in the hours after the news has been released.
AUD/USD – Sell Zone Broken, Price Currently Falling
The sell zone which AUD/USD has been in for the past couple of days has been broken by a move higher which originated from the zone I said to watch for entries long in Monday’s market commentary.
Over the past few hours we have seen some selling enter the market, I’m not sure if this is because the banks are taking profits off buy trades to purposely generate sell orders ready for when the FOMC releases at 7:00pm or if it’s because they have got sell trades placed into the market. My personal view is that it’s because they want to generate sell orders ready for the FOMC releases but I’m still not 100% sure on this so we’ll have to wait and see.
As with the other currencies it’s best to wait until the FOMC has been released before making any kind of decisions regarding the future price direction.