EUR/USD – Spike Through Demand Zone
The up-move we saw begin after the market hit the demand zone did not continue last night. Instead the market started to drop after a move up towards the current high failed and resulted in a bearish pin bar forming. Today the drop has made the market fall back into the demand zone that caused the move higher to take place, though at moment it’s tough to determine if the zone is going to hold, or if we’re going to see the market break through it.
My personal feeling is that we’re going to see the market break through the zone and move down to the low made at the end of April, before reversing or retracing higher. If a drop down to the low does take place, it could be the beginning of a large reversal structure pattern forming. If this is the case, we’ll see another swing down begin once the market returns to the point where the current high has formed.
At the moment I suggest you continue to watch to see if the market breaks through the demand zone. There isn’t really much to do until the market reaches the low, so it’s best to just monitor things for now.
USD/JPY – Moving Back Towards Price Action Zone
The consolidation we were seeing take place yesterday turned into a retracement last night, and has today caused the market to move all the way back to the point where the price action zone caused the previous swing down to begin on Monday.
Though the market has moved back to the zone, I don’t recommend you use it as a zone to watch for entries into trades, due to the fact these price action zones that form at the end of big moves typically only tend to work once before being invalid for trading. We might see a small move down take place once the market comes near to the zone, but I don’t think it will be enough for us to make a decent amount of money off getting a trade placed. As far as trades are concerned, there isn’t anything that sticks out to me at the minute, so it’s best to wait for more price action to form.
AUD/USD – Reacting To Daily Supply Zone
Today we’ve seen the market react to the daily supply zone it had just entered at the time yesterday’s market commentary was published. So far the reaction to the zone doesn’t suggest we’re going to see a big reversal/retracement take place, although this could change if a sharp drop pushes the market down later on tonight.
If what we’re seeing now is in fact just a retracement before a new move higher occurs, I think the next move up will cause the market to break through the daily supply zone. If a sharp drop takes place and pushes the market down to around the 0.75000 level, it’ll be a sign a potential reversal pattern is forming, which means we’ll have to watch to see if another swing down occurs once the market return to the point where the drop originated from.