EUR/USD – Retracement Taking Place
The larger retracement I spoke about in yesterday’s market commentary did begin last night. Today we’ve seen it continue, and the market is currently heading down towards the low created by the retracement we saw form yesterday morning.
I’m not sure how big this retracement will be, but I think that we’ll probably see it come to an end somewhere around the low I’ve marked with the red line. This low is the last point where the bank traders got some of their trades placed. Although they didn’t actually get many placed here, it is still the most recent point where they are likely to come into the market and get more executed. If they do decide to get more placed, the resulting move up may create a demand zone we can use to look for entries into long trades, so for now I suggest you continue monitoring the price action.
USD/JPY – Demand Zone Broken
Last night we saw the large down-move that began on the 15th continue, and cause the market to drop below the demand zone I suggested would cause a retracement to take place in yesterday’s post. Although the demand zone didn’t cause a retracement to occur, we are now starting to see some up-movement take place, which could be a sign a retracement is in the process of developing.
If this up-move does develop into a retracement, we’ll have to watch the price action that forms for signs of a reversal taking place, because at the moment there isn’t really any technical levels which we can monitor for entries short. A sharp move down will be good sign the retracement has come to an end, as will a large bearish engulfing candle forming, so keep an eye out for these if the up-move continues tonight.
AUD/USD – False Breakout ?
The high which the market was moving back towards in yesterday’s post has been broken today, but after being broken the market dropped back down, and is now siting just below the price where the highs formed. The fact that the market fell all the way down right after the high had been broken, suggests that it was merely just a false breakout, and that we’re likely going to see the market fall below the current low later on tonight.
If the low does get broken, I think there’s a good chance the market will fall back down to the point where it reversed and caused this upswing to form. If the market moves back up to the point where the new high formed, and then drops again, it could be a good signal the bank traders are getting sell trades placed to make the market drop.
For now I think the best thing to do is wait for more price action to form.