EUR/USD – Small Retracement May Cause Move Lower
After breaking to new highs late last night EUR/USD has spent the majority of today falling.
If we look at the daily chart we can see the price is inside the sell zone created by the bank traders placing sell trades. The high of this zone falls in-line with the point where two other highs formed previously and another high which happens to be the high of a bearish pin bar. The fact all of these highs are found quite close together means the banks could be getting sell trades placed in anticipation of a downtrend continuation, the move up into the sell zone the market is currently in could simply have been created by the banks in order to get people to place buy trades which they can then use to get more of their sell trades placed close to where their other sell trades have already been placed.
If this is in fact the case which I strongly believe it is I would wait for some kind of large move down to take place on the 1 hour chart. A big move down would signal to us the banks have got some of their sell trades placed but it’s unlikely they have been able to get all of their sell trades placed due to not enough buy orders being present which means a move back up is likely to take place so the banks can get people to place buy trades and thus fill the rest of their sell trades. This second move up which might take place will terminate near the point where the first move down started as the banks like to get all their trades placed at similar prices therefore if we look for signals of additional selling around the point where the first drop began we could end up with a good entry short.
USD/JPY – Further Sideways Movement
After another attempt to break the low failed USD/JPY continues to consolidate just above the lows.
We can see the price tried to break through the low around midnight last night but the move failed and the market began moving higher again. The repeated attempts by the market to break these lows and subsequent moves higher leads me to believe the banks might be getting buy trades placed in anticipation of a reversal or retracement occurring. This would tie in with what we are seeing on EUR/USD. The catalyst which may cause EUR/USD reverse out of the daily supply zone would probably make USD/JPY climb higher from its current location so the reason the price is failing to break these lows may be because the banks are getting positioned ready for when the reversal begins.
If this is what’s taking place the low marked in the image cannot be broken by more than 50pips, if it is it means the banks are not getting trades placed and instead the multiple failures to break through the lows were simply the banks taking profits off sell trades.
AUD/USD – Another Move Lower Pushes The Market Below The Lows
The market didn’t end up returning to the supply zone which I marked in my last post as a place where you want to be looking for short trades.
Instead the market reversed just before it reached the zone late last night and has been in decline ever since. I think today marks the point where the market will start much quicker because it’s unlikely the banks have any more sell trades left which they need to place, there’s already been 6 major swing highs that have formed most likely because of them placing trades ( remember we can never be 100% sure ) so I think it’s unlikely they have any remaining sell trades left to get executed in the market.
Despite this a retracement of some sort is still probably going to take place soon after the market has properly reversed and it’s likely we’ll be able to use that as a time to get our own short trades placed. For now it’s best to wait until next week before conducting any more analysis.