EUR/USD – Falling Into Demand Zone
The move back towards the high we were seeing take place in yesterday’s market commentary continued last night with the market breaking through the high and moving into the supply zone created by Monday’s drop. The market has subsequently now fallen out of the supply zone and is heading into the demand zone created by the move up into the supply.
The size of the drop out of this supply does make me a little edgy we are going to see the market continue to fall but then again you’ve always got to keep in mind the banks have to make the market look as bearish as possible before causing a reversal to take place in order to accumulate enough sell orders to get all of their buy trades placed. We have to keep a close watch on the market now because if it is going to reverse we’ll see it turn at either the demand zone it’s entered today or the lower demand zone created on the 24th.
There’s not enough price action currently to say which zone the market is going to reverse at so we’ll have to monitor the price action over the next few hours to see if there are any signs telling us the market is reversing out of this demand.
USD/JPY – Large Move Back Into Reversal Zone
Yesterday’s swing lower came to an end in the early hours of this morning, since then market has moved all the way back into the zone which created the swing and I now think we may see the 113.911 high broken before the market reverses.
I did expect the second swing down out of the upper green zone to last a little longer, maybe until it fell in to the bottom green zone where I said to watch for a reaction. The fact it didn’t suggested another move into the upper green zone was likely to take place. Because today’s move higher has been so strong it makes me think that maybe we’re not going to see the market reverse out of this sell zone after all, maybe we are just going to see the market continue moving higher and higher similar to how the main USD/JPY uptrend began back in 2012.
I think it’s best to wait for now, sometimes during reversals the market will break a significant high or low before reversing so we might see the market break through the high above before reversing lower or we might see it break the high of the daily sell zone before reversing.
AUD/USD – Large Drop Out Of Supply Zone
Today we have seen the market fall out of the supply zone it has been trying to break through for the past couple of days, it did look the market was going to break the zone with the move up that began yesterday but it failed and is now moving lower.
I’m not sure if today’s drop out of the supply zone signals the end of the retracement the market has been in since the 21st November or if we are going to another move higher take place. I think due to the size of the drop it’s likely the retracement has now come to an end and we should begin looking for entries into short positions. There isn’t any supply zones at the moment which we can use to get an entry short, but I think the demand zone the market is returning to now may cause a retracement to take place that will end up creating a supply zone we can hopefully use to look for an entry short.