EUR/USD – Possible Retracement Forming
Today we have seen the price of EUR/USD drop, it’s looking likely that the drop is the beginning of a retracement although it difficult to tell how far the market will retrace before moving higher again.
The demand zone failed to cause any type of up-movement or pause and was broken by a single large bearish candle. No bullish engulfing candle was seen when the price entered the zone so no entry long could be taken. The new low suggests the momentum is now to the downside but I would hold off entering any short trades because this retracement could be short-lived and it might not be long before we see the market break to new highs.
In order to go long we need to see a lower high made followed by a higher high, this would signal to use that the momentum is back to the upside and it’s safe to go long. Trying to pick where this retracement will end isn’t a good idea and we’ll probably lose money trying do it, so I think it’s a better idea if we wait until we know the price is more likely to move back to the upside before looking for levels we can use to get a buy trade placed.
USD/JPY – New Lower Low
The market has finally broken past the low made by the retracement higher and is now approaching the low created by the retracement on the daily chart.
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Currently the market has been grinding lower instead of rapidly falling which suggests that something big is building up behind the scenes. It could be the banks placing a large number of sell trades in expectation of the UoM Consumer Sentiment news which comes out tomorrow afternoon. The news might be the catalyst which causes the market to make a big move lower.
There isn’t really much we can do at the minute, we’ll have to wait until the news has come out tomorrow to weigh up the situation and see what technical levels form.
AUD/USD – Falling Lower After New High
AUD/USD has also taken a slide today after initially making a new high early this morning.
The demand zone which I marked in yesterday’s post didn’t work out but since it has been broken we have seen some signs of bullish price action enter the market. It’s too soon to tell whether this price action is the beginning of a new move higher or if it’s simply a pause in the retracement. We’ll have to see what price action develops over the next few hours to get a better idea of which direction the market is likely to move in.