EUR/USD – Buy Zone Broken
Today we have seen the market break through the buy zone which caused a small retracement to take place yesterday morning. Although the buy zone has now been broken, we haven’t really seen the market drop a large distance beyond it and right now we are actually seeing some bullish price action form so another retracement may take place over the next few hours.
If another retracement does develop over the next few hours, I suggest you watch for entries short inside the new supply zone I’ve drawn just above the buy zone which got broken last night. This supply zone and the two swing highs seen within mark the most recent points where the banks traders have got sell trades placed. The retracement we might see take place could just be them taking profits off the sell trades they’ve already got placed to make the market move back up so they can get more sell trades placed at a better price in the market. If this is what they’re doing then we’ll probably see the market reverse once it reaches the supply zone, because the banks like to get their additional trades placed into the market at similar prices to one another.
USD/JPY – Falling From Sell Zone
Yesterday’s sharp move higher continued to push the market up this morning, but this up-move has since come to an end after the market spiked the outer edge of the sell zone that formed back in January.
I don’t think this sell zone is going to cause a significant amount of downside to take place, but I think it does have the potential to cause the market to drop back into the buy zone that formed as a result of the sharp move higher we saw yesterday. If you do see the market drop into the buy zone tonight or tomorrow, watch for a large bullish engulfing candle to form, as that will be a sign the banks are getting more buy trades placed to make the market reverse.
AUD/USD – Back Inside Daily Supply Zone
The sharp drop out of the daily supply zone we saw take place yesterday ended up terminating at the buy zone just after yesterday’s market commentary was published.Once the buy zone had been reached the market started moving higher again until it came into contact with the sell zone I drew around the swing highs in my previous market commentary. This sell zone has caused a move down to take place, but in the past couple of hours a move up occurred which has pushed the market back into the zone.
At the moment it’s difficult to say whether this sell zone is going to contain the up-wards momentum or if we are going to see the market just break straight through it over the next few hours. I think that if the bullish candle for this hour stays as it is now with a relatively large wick on it, then it’s a good sign the sell zone is probably going to hold and we’ll see some downside take place this evening. If the bullish candle closes quite close to its high, then I think a possible up-move through the sell zone could occur later on to tonight. For now it’s best to wait for more price action to form before going short or long.