EUR/USD – Retracing Back Into Supply Zone
After last weeks decline EUR/USD is now retracing up close to the supply zone which I marked in my last post.
This supply could give us an entry short should the market move back into it and produce a bearish engulfing candle. The structure of the retracement tells me there is a good possibility that this could take place, so far the retracement has not been strong with bits of buying followed by instances of selling. Its likely this is because bank traders are taking profits off sell trades while other traders continue to sell short.
Tonight watch for an entry into the supply zone, a bearish engulfing candle is need before we go short and we need to see the price drop and make new lower lows after the zone has been hit in order to confirm the market wants to fall lower.
USD/JPY – Consolidating After Stop Run
After the market hit the sell stops last week the price continued to drop and eventually ended up making a new lower low. Since then we have seen the market retrace slightly and it is now consolidatng around the halfway point of the drop caused by the stop riun .
I think if we see a move up to the upper boundary a short trade could present itself. The banks have been selling up here as evidenced by the three drops which have occurred each time the price has rose up to this level, if they wish to sell again they’ll do it around this area as this is where they have sold before.
For now just watch and see if the market manages to break to the upside into the upper boundary, an obvious bearish pin bar up here can be used for an entry as can a large bearish engulfing candle if it appears.
AUD/USD – Retracing higher After Last Weeks Downmove
AUD/USD also fell by a large percentage last week but today we have seen some signs of profit taking enter the market with a retrace higher against the trend.
The current price action on AUD/USD is quite difficult to read, the drop has pushed the market to being within close proximity to where the previous uptrend started from so there is the potential for a multi day retracement to take place when the price falls back to the source of this upmove.
Tomorrow keep an eye out for a reversal taking place. if the current retracement ends up being engulfed by bearish engulfing candle it should create a supply zone, a retest into this zone is possible soon after its formation so make sure follow the price action closely.