EUR/USD – Possible Consolidation Forming
The drop into the demand zone we were seeing take place yesterday continued after my market commentary was published and the market actually fell into the demand zone below before moving back towards the supply zone again.
Both demand zones now become buy zones due to the fact multiple large swings higher have taken place upon the market reaching the zones, and the supply zone which caused yesterday’s move down take place is now a sell zone because of the size of the drop which occurred when the market returned to the zone yesterday morning.
I think looking at the current market structure we might be seeing the market enter a multi-day consolidation phase with the sell zone at the top acting as the upper boundary and the buy zone at the bottom acting as the lower boundary. As for trades, I would look for entries long when the market reaches the buy zone at the bottom of the image or entries short when it reaches the sell zone at the top. We’ve got the NFP release coming out tomorrow so that might push the market down into the lower buy zone or it may even push the market up if it comes out negative for USD which means we could see a reversal out of the daily buy zone take place.
USD/JPY – Reversal Potentially Over
The reversal out of the sell zone we’ve been expecting to take place for the past few days may now not occur due to the market continuing to move up through the reversal zone and nearly past the highs of the sell zone itself.
You can see how the market broke through the reversal zone soon after yesterday’s market commentary was published, from there it pushed its way up towards the high of the daily sell zone and now we’re seeing it move up to the high again after a small down-move took place earlier today. Although I think the odds of the market reversing out of the daily sell zone are now slim, I do believe a reversal could take place so long as we see a large drop occur down to the demand zone marked on the image. The drop doesn’t have to reach the demand zone but it does have to terminate somewhere near to it as that would be a sign to me the banks are getting sell trades placed to make the market reverse.
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For now I think it’s best to stay out the market until the NFP has been released tomorrow afternoon. There isn’t currently any zones close to the current market price where I would say to look for an entry long or short so we’re not missing out on anything by waiting for the NFP to be released.
AUD/USD – Reacting To Demand Zone
Yesterday’s reversal out of the sell zone came to an end last night when the market reached the demand zone created during the move out of the daily buy zone.
When the market reached the demand a small up move began which lasted most of the night but this came to an end early this morning around the time the London trading session opened. Another move down into the demand has since taken place but this again looks to be failing due to the large bullish engulfing candle we saw form an hour ago. Whether this engulf can push the market back up into the sell zone remains to be seen but I’m pretty confident the retracement has now come to an end and I think we should begin looking for entries into short positions.
The sell zone at the top of the image is currently the best place to look for entries into short trades, if the NFP comes out as being negative for USD we could see the market rise back into this zone so be on the lookout for bearish engulfing candles if the market enters the zone tomorrow. If the NFP comes out positive for USD the market will probably drop from its current position but that would create a new supply zone we can use to look for entries short next week so really it’s a win win in my opinion.