EUR/USD – Supply Zone Broken By Move Higher
The supply zone which the market was reacting to when I published yesterday’s market commentary ended up being broken last night, now the market has continued to move higher it’s looking like we are going to see a return to the daily supply zone seen at the 1.12000 level.
As you can see from the image, when the market broke through the high of the 1 hour supply zone a bearish engulfing candle formed. This engulf did not cause the market to reverse and a few hours later the market was already trading above it. With the daily supply zone broken, I think a move back up to the daily supply at the 1.12000 level is now likely. I don’t think we’ll see the market enter this supply zone today but we could see a further advancement towards it if the FOMC comes out as negative for USD.
I wouldn’t recommend placing any trades until the FOMC news has been released at 7:00GMT. The demand zone I’ve marked in the image is a point where I think we could see the market reverse if the FOMC causes the price to drop, so monitor that level closely for potential entries long.
USD/JPY – Large Drop Into Daily Buy Zone
The drop which began yesterday afternoon has continued throughout today, and the market is now sitting inside the daily buy zone.
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What the market does when the FOMC comes out could be really important for the outlook over the next few weeks. If the FOMC causes the market to move higher out of the daily buy zone, it’s a strong sign we are going to see the market break through the high of the 1 hour supply zone and continue moving towards the daily supply zone seen at the 106.000 level. If the FOMC comes out and causes the market to fall through the daily buy zone, it’s likely we’ll see the market fall back down towards the source of this whole move up at the 100.000 level.
For now stay on the sidelines until the FOMC has been released.
AUD/USD – Reacting To 1 Hour Supply Zone
Currently AUD/USD is reacting to the supply zone which formed from yesterday’s drop, I’m not sure if this supply is going to cause the market to reverse or not but I wouldn’t recommend placing any sell trades due to the fact we have the FOMC being released in a few hours.
The drop did end up continuing until the market had hit the black line which meant the supply zone was valid for trading. The drop eventually came to an end close to the point where the move up originated from, some people would have marked this point as a demand zone although I tend not to due to the fact most of the buy orders which caused this move up to take place, would have been placed at the low seen just above the daily demand zone.
Similar to EUR/USD and USD/JPY we’ll have to wait and see what the market does after the FOMC has been released before deciding whether to go long or short, at the moment things are 50/50 but hopefully the release will give us a better sense of where the market is heading over the next few weeks.