EUR/USD – Climbing Back Towards Current High
The drop we were seeing take place yesterday ended up coming to an end right after my market commentary was published. When it ended another move higher did begin, but this failed to cause the market to break above the current high. This afternoon we’ve seen another move higher take place, though currently it looks like this one is also going to terminate shortly.
At the moment the outlook basically remains the same as yesterday. If this current move higher ends and causes the market to drop back into the demand zone, watch for an entry long, as it might be because the bank traders want to get more long trades placed. If the move higher continues, and we see the market break above the current high, it’ll be a sign further upmovement is going to take place, so we’ll have to continue watching the demand zone above for trades as well as watching for new zones to form.
USD/JPY – Large Drop Below Current Low
The downmove which began after the market touched the price action zone has continued today, with a large drop through the current low taking place in the early hours of this morning.
The drop has pushed the market closer to the daily demand zone that formed at the source of the swing higher which began on the 18th April. Judging by the fact that since the move down began no large retracements or consolidations have taken place, I think that it’s likely we’ll see one occur once the market reaches the daily demand zone. There’s no way to judge how big this retracement – consolidation or even reversal could be at the moment, so we’ll have to monitor the reaction to the zone to get better idea of what might be taking place.
AUD/USD – Inside Supply Zone
AUD/USD is currently inside the supply zone I said to watch for entries short in yesterday’s post. So far we haven’t seen the market drop out of the zone, but if we do expect to see a reaction take place once the market reaches the zone I’ve marked on the image. This zone marks the point where the source of move higher which pushed the market into the supply zone originated from. Typically if the market falls back to the source of a move soon after it has taken place, it’ll cause a reaction to occur that’ll push the market back in the direction to which the move occurred.
At the minute it doesn’t look like we’re going to see the market fall out of the supply zone, but this could change if the current candle closes more towards it’s lows. If a drop out of the zone does occur, but you fail to get an entry short, watch for a bearish engulf to form after the market reacts to the zone I’ve said will cause a reaction to occur.