EUR/USD – Second Spike Into Supply Zone
Yesterday we saw the market spike into the sell zone which formed back on Friday afternoon, today we have seen another spike into the zone take place and another failure to move lower from the zone.
We can see the second spike broke through the high of the first spike, this was because there were some buy stops which had accumulated above the high. You’ll also notice there were a couple of bearish pin bars that have formed over the past few hours, I’m not really sure if these have formed because of the bank traders placing sell trades or because the banks are taking profits off long trades, my long-term outlook suggests they are more likely to have formed due to the banks placing sell trades but I can’t confirm this to be true just yet.
For now it’s best to just await further price action, it seems at though the market is trapped between the sell zone and the buy zone so watch for the market to break through one of these zones before deciding whether to go long or short.
USD/JPY – Moving Higher From Demand Zone
Last night the market fell into the demand zone we suspect has been created by the banks placing buy trades and the subsequent move higher out of the zone leads me to believe that a reversal structure is forming in the market.
Looking at the image we can see the market first fell into the demand zone around 10:00pm last night, this caused the market to stop falling for a few hours but it didn’t take long for the price to fall again and drop deeper into the zone. At this point an indecision candle formed that was followed by a bullish engulfing candle which set the current move higher in motion. The area we need to be monitoring now is still the demand zone which caused the move higher to take place, if the two swing lows I’ve marked in the image have been created by the banks placing buy trades then anymore buy trades they still need to place will be placed close to where the others have been placed which is the area the demand zone encompasses.
If we see the market move down into the demand zone again I think it would be a good idea to look for entries long as there’s a high probability the reason it’s moved down is so the banks can generate sell orders to use to get their remaining buy trades placed. If you see a bullish engulfing candle form when the market enters the zone again it’s likely to be because the banks are getting their remaining sell trades placed into the market.
AUD/USD Falling From Area Marked In Yesterday’s Post
Today we have seen the market fall from the area which I said to watch for entries short in yesterday’s post.
You can see the market entered the area around 8:00pm last night and started to fall out of it at 1:00pm with the appearance of a bearish engulfing candle. Now the market is fast approaching the buy zone seen on the daily chart, I think this buy zone will cause the market to retrace possibly back up to the area that has caused today’s drop to occur or maybe the small supply zone that formed after the drop out of the area had taken place.
I doubt we’ll see the retracement occur by the end of today so I think it’s better to wait until tomorrow to see where the market has moved to before making any decisions on going long or short.