EUR/USD – Market Falling Out Of Supply Zone
The market has started to fall out of the supply zone I said to watch for an entries short in yesterday’s post.
Looking at the chart we can see the market entered the supply zone at 12pm which is around the time the NY trading session begins. It could be that the NY traders have been placing sell trades into the market over the course of this afternoon in anticipation of a move lower taking place. The candle seen two hours ago may have formed because of the NY traders placing their sell trades into the market. The reason I say this is because when the candle was forming the price dropped before recovering and ending bullish, the drop might have taken place due to the banks getting some of their sell trades placed, the fact the candle eventually ended bullish could have simply been because the bank took some profits off their sell trades in order to get more traders to place buy trades and thus get more of their own sell positions filled.
For now watch to see if the bearish engulfing candle remains bearish by the end of the hour if it does it’s likely we’ll see the market move down to the lows of this move up. Alternatively the bearish engulf should create a new supply zone we can use to look for sell trades if the market is to return to this zone in the near future.
USD/JPY – Further Consolidation After Sharp Move Higher
USD/JPY has spent most of today consolidating after making the sharp move higher we saw yesterday.
The move down which looks likely to occur on EUR/USD should push the price of USD/JPY up out of the consolidation but I think we may see a spike into the area just below the consolidation where we suspect the banks have got some of their buy trades placed. At the minute there isn’t really much we can do in terms of getting trades placed, all I can say is to watch to see if the market ends up dropping back into the area found below the consolidation, if it does and evidence of the banks placing buy trades starts to form i.e bullish engulfing candles, it’s likely the price will begin to move up and break through the highs of the consolidation.
AUD/USD – Supply Zone Broken
The supply zone which formed when the market rose and subsequently dropped yesterday afternoon has been broken today but it’s looking likely that the reason why the market broke the supply was because the banks are getting more sell trades placed into the market.
You can see how the market moved up inside the supply zone before a bullish candle broke through the high of the zone and almost caused the market to enter the supply zone above. Since then the price has fallen and I think it’s probable we’ll see a move down to the lows either tonight or tomorrow. As far as getting trades placed is concerned there isn’t really any levels we can use at the moment to get short trades placed but I think if we see the market come down and break the lows the supply zone which was broken earlier today will become a sell zone which we can use to look for potential entries short.