EUR/USD – Profit Taking Entering The Market
After last week huge move higher it was inevitable that we would see the banks take some profits off their long trades.
The three arrows show the points where the banks have taken profits. Currently we are seeing the price move up, it’s likely this move up will break the highs made by the profit taking but in the event that it doesn’t, the demand zone marked on the image is a place where you can look to get a long trade placed.
This demand isn’t really a demand zone so to speak, its drawn based on the point where the market structure began to change when the move up was taking place. It was at this point where we started to see more selling enter the market from the banks taking smaller amounts of profit off their buy trades, the only way they are able to do this is if new traders have come into the market and placed buy trades, these traders started entering their trades at the location where I’ve marked the demand zone ( you can see this easier on the 5 minute and 1 minute charts )
If we see the market fall back to where this zone is located it should make any traders which have brought since the point where the zone formed close their trades at a loss which would put sell orders into the market that the banks can use to get additional buy trades placed.
Tomorrow watch for a drop into the zone and await the formation of a bullish engulfing candle, if we don’t see a drop and instead the market goes on to break past the highs made by the profit taking, mark the highs as a breakout zone and watch for a bullish engulfing candle to appear.
USD/JPY – Retraceing Higher After Down-move
USD/JPY is currently pushing higher against the down movement we saw last week.
The market is still in close proximity to the low of the entire retracement, at the time of writing the current low is 80 pips away from the retracement low, we need to see a break below here in order for the downtrend to resume, but the candles which break the low must close below the low itself. If they don’t and instead we see a spike below the low, then that could mean a consolidation is forming and the price may be about to move back up.
Tonight watch for a bearish engulfing candle to end the current move up and push the market into the retracement low. Once the price is near the low monitor the price action to see if the candles manage to close below the low itself, if it does expect more downside over the coming weeks.
AUD/USD – Profit Taking Followed By New High
Profit taking came into the market once it opened last night and a small down-move took place, since then we have seen the price climb higher and make a new higher high.
Right now there is some selling taking place so the banks might be taking even more profits off their buy trades. We could see the price fall down a little from here into the lows of this current up-move where I’ve marked the demand zone. If the price falls into this demand watch for a bullish engulf to appear before entering long.