EUR/USD – Large Drop After Consolidation
Last Friday we saw the market make a large move higher after it fell into the demand zone that was found inside the daily buy zone. Today we haven’t seen a continuation of this up-movement but have seen the market drop after spending most of the day consolidating in a tight range.
The market did end up entering the supply zone which I marked out with black lines in my previous post but no obvious signals appeared to get short so I doubt you could have caught today’s drop lower. At it stands I don’t think this drop is a sign the market to going to reverse back to the daily buy zone although this could change if the market continues to drop over the course of tonight.
Tonight watch to see if the market continues to drop or if it begins moving higher again back towards the supply zone that has been created by today’s drop, even though I feel like the market is going to continue moving higher quite soon, I think that if a large bearish engulfing candle forms inside the supply zone it could signal the beginning of a reversal back to the daily buy zone.
USD/JPY – Price Approaching Swing High
USD/JPY is currently in the process of moving towards the swing high that was made when the market fell back on the 29th September.
If the market is able to break through this swing high I think it will go onto move into the supply zone found above, I’m not convinced this will happen tonight but if does watch the demand zone I’ve marked in between the two lines for entries long as this will become the most recent place the banks have got buy trades placed into the market. If we don’t see the market break the swing high and instead it begins to fall watch the lower demand zone marked in orange for entries long because at the moment this demand marks the nearest point where the banks could have come into the market and got long trades placed.
AUD/USD – Market Currently Inside Supply Zone
At the moment AUD/USD is inside the supply zone I said to watch for entries short in Friday’s market commentary.
So far we have seen the market drop out of this zone twice but on both occasion the previous swing low has not been broken which suggests we are going to see the market break through the supply zone. I think if the drop out of the zone we are seeing now continues and the market comes down and breaks the swing low I’ve marked, it’s a good sign the market is going to continue falling down the point where this up-move originated from.
For now don’t place any sell trades until the market has broken the swing low on the image, if you placed any sell trades when the market came into the supply zone monitor them closely because I think the market will end up breaking through the zone starts moving back up.