EUR/USD – Moving Higher From Demand
Today the market has moved higher out of the demand zone which formed when the USD news was released last Friday.
The question now is whether the market is going to continue to move up past the current high made last week. A break above here would suggest more upside is on its way over the coming days and would tell us the reason the demand zone was created was because of the bank traders placing buy trades to make the market reverse. If the market isn’t going to continue higher I would expect a drop to take place near the current high as this is the last potential place the banks have got sell trades placed into the market.
USD/JPY – New Supply Zone Formed After Retracement
The USD news which caused the up-move seen on EUR/USD also caused a large down-move to occur on USD/JPY.
On USD/JPY a really big drop took place which caused the market to break through the previous lows. After the drop had come to an end the market started to retrace because the bank traders were beginning to take profits off their sell positions which they had placed before the drop occurred. The retracement continued until the markets opened last night at which point the price began to drop, the drop has pushed the market back down towards the lows of the retracement and we are now starting to see a small move higher take place.
This is probably because the banks are taking more profits off their trades which they were unable to when the price fell due to the news last week. If the profit taking continues we could see the market enter the supply zone that formed because of today’s drop, if the market is able to enter this zone it’s likely the banks will get more sell trades placed so make sure you watch for a bearish engulfing to form before going short.
AUD/USD – Buy Zone Broken, Market Now Moving Back Towards Sell Zone
The drop caused by the USD news last week caused the market to break through the buy zone where the banks had placed buy trades.
Although the buy zone has been broken the fact the market has only managed to break it by a small distance suggests the banks may still have used it to get buy trades placed. The focus now is on whether the market is able to break through the two sell zones. Both of these zones have formed at places where the banks are likely to have placed sell trades into the market, if they are to get any more sell trades placed they will place them at one of these two zones.
Tomorrow watch for a move higher into the zone closest to the current market price, if a bearish engulfing candle forms once the market is inside the zone there’s a high chance the price will start to move lower.