EUR/USD – Drop Back Into Daily Buy Zone
The drop out of the tight consolidation which began yesterday has continued today with the market currently inside the demand zone found within the daily buy zone.
We didn’t see the market return to the supply zone that was created by the drop but I do think the market may end up reversing here if we see the price rise out of the demand zone again. My longer term outlook of the market is now back to what it was originally, I did feel that with the strong move up we saw last week the market would go on to break through the swing high made on the 26th of September but with today’s drop I do think it’s unlikely we’ll now see that take place.
Instead I believe we’ll see another move higher occur from the demand zone the market is currently in, this move higher will terminate either around the point where the supply zone has formed or somewhere in the middle of the swing down, if it comes back to the supply zone watch for a bearish engulfing candle to form inside the zone before going short, if you see a sharp down-move take place when the market is around the halfway point of the swing watch for a reversal to occur and draw a supply zone from the sharp drop because it probable there will be a spike into the zone before the market drops back through the daily buy zone.
USD/JPY – Supply Zone Broken
In the past hour we have seen USD/JPY break through the supply zone I said would cause a retracement to occur in my last post, although the zone has been broken I think a retracement will still take place once the market enters the supply zone found above.
It is possible we could see the market reverse completely once it enters the upper supply zone due to the fact it formed because of the bank traders placing a large number of sell orders into the market, this whole move up may have occurred simply because the banks have more sell trades left to place which they weren’t able to when the supply zones formed. While I think this is unlikely due to the size of the move up we have seen take place, it’s still a possibility which needs to be considered when the market enters the zone.
I think the retracement out of the supply zone will end somewhere in the area I’ve said to watch for entries long in the image, if the market falls into this zone watch for a bullish engulfing candle to form before entering a long trade.
AUD/USD – Supply Zone Broken, Market Falling Again
The supply zone which the market had entered yesterday did get broken a short time after my last market commentary was published,
Looking at the chart we can see the market only broke through the supply zone by a few pips, after that it started falling again and an hour ago it broke through the swing low . I do think we will see the market reverse by the end of the week but I’m not convinced the drop we have seen today is the beginning of the reversal, I believe another move up will occur into either the supply zone marked in orange or the supply zone marked in white, I’m not sure which it’ll be so be on the lookout for bearish engulfs when the market enters each zone.