EUR/USD – Stop Run Causes Sharp Drop
Last night we saw the market continue to drop into the zone I had said to watch for entries long in yesterday’s market commentary. A move out of the zone did end up taking place, but it did not cause the market to break above the highs of the drop which had occurred earlier on in the day. Today the move out of the zone has come to an end, and over the past hour we’ve seen a sharp drop take place which has pushed the market back into the zone that caused the move higher to take place.
The sharp drop lower has been caused by a stop run which took place a couple of hours ago. If you check Oanda’s order graph you’ll see that a number of buy stops had accumulated between the 1.09200 – 1.09400 levels earlier on today, when these stops were hit, it caused the market to fall and a bearish pin bar was created. We’ve now seen the market fall even further, and at the moment it seems like we could see the zone which caused the move higher to occur last night get broken by the end of the day.
There isn’t really much we can do until the zone gets broken, so for the moment I suggest you wait for more price action to form.
USD/JPY – Moving Higher After Drop
The deeper move into the daily supply zone we were seeing yesterday did end up resulting in a drop, although not one which I think is now going to cause the market to reverse.
The drop itself was quite sharp, but it didn’t last long enough for me to considered it have been formed from the bank traders placing sell trades to make the market reverse. I still think we’re going to see the market reverse out of this daily supply zone, but I’m not sure if we’ll see it happen by the end of the week. It’s much more likely we’ll see it reverse towards the middle of next week, because that would give the market enough time to form more downswings. The drop which occurred last night could be one of the downswings in the reversal, but more need to form in order for that to be confirmed as being true.
For now I recommend that you stay on the sidelines and await more price action.
AUD/USD – Dropping After Retracement
The move through the demand zone we saw yesterday has continued today, with the market falling again after a small retracement took place late last night.
It’s tough to say where we might see the market reverse now, because all of the demand zones found below the current market price are too old to be used, so we’re just going to have to watch the price action to try to pick up on when a reversal or large retracement is going to take place. It’s likely that if a reversal or retracement is going to occur, it will do so near the big round number prices, so watching them for signs of a reversal is the main priority going into tomorrow and next week.