EUR/USD – Price Has Fallen Out Of Daily Sell Zone
Today we have seen the market fall out of the sell zone that was created by the bank traders placing sell trades.
Looking at the 1 hour chart we can see the price is currently in the process of moving higher out of the demand zone that formed when the FOMC was released last week. The way the market has fallen out of the sell zone leads me to believe that we’ll see another move higher take place possibly up to the highs of the drop itself or even 10 or 20pips above the high.
We know if the banks are getting sell trades placed while the market is inside the sell zone they’ll not be able to get all of their trades placed at one price so we can expect another couple of swing highs to form close to where the high of the current drop has formed before any kind of reversal has taken place.
For entries short I would watch the area marked in white on the image. A bearish engulfing candle around this point will be a great signal that the banks are getting some more of their sell trades placed into the market.
USD/JPY – Price Falling After Hitting Supply Zone
The price of USD/JPY gaped higher when the markets opened last night and proceeded to move into the supply zone marked in my daily supply and demand zones page.
Right now the market is reacting to the area created by the market gaping higher, I don’t think this area is going to cause any significant movement higher but in the event that it does it’s important to keep an eye on the supply zone which caused today’s drop to take place. If this drop has been caused by the bank traders getting sell trades placed in anticipation of a reversal they will not want the market to break more than 50pips past the high of the drop as based on recent data this is the max distance in pips the price can move past a swing high or low before the swing is considered to have formed because of the bank traders placing trades to make the market reverse.
The area seen at the bottom is a place where you want to be looking for entries long when the market returns as there is a high chance the bank traders have got buy trades placed at the swing lows which this area encompasses they may still have buy trades left to place, if they do you can be sure they will place them near to where their other buy trades have been placed.
AUD/USD – Market Moving Up After Small Move Lower
AUD/USD is back moving to the upside after initially falling when the markets opened last night.
If this move higher continues I would watch for entries short around the supply zone marked in the image. This supply zone is the last known point where the banks came into the market and placed sell trades, if they are to keep these trades open they will not want the market to break a large distance past the point where their sell trades have been placed. If the market is able to break the high I’ve marked with an X by more than 40pips it would strongly suggest the market may not actually be in the process of reversing lower and instead could actually be continuing higher.