EUR/USD – Buy Zone Causes Small Retracement
The buy zone which we witnessed the market fall into yesterday afternoon has caused a small retracement to take place today, but this now looks as though it’s coming to an end because a large drop this past hour has pushed the market much deeper into the buy zone. It remains to be seen whether the market will actually break through the buy zone but with the things the way they are currently, I think there’s a strong possibility we’ll see the zone broken later on tonight.
If the market breaks through the buy zone I think we’ll see a drop down to the demand zone seen between the 1.0452 – 1.0480 levels take place. This demand zone is the next most recent point in the market where the bank traders got buy trades placed. If they still want these buy trades to remain open we’ll not see the market break a large distance below this zone, which I think is unlikely due to the length of time the market has now been away from the zone.
If the price action we’re seeing now becomes more bullish and the market moves up out of the buy zone a move into the supply zone is likely to take place, so continue watching for entries short in this zone if the market moves up.
USD/JPY – Sharp Move Higher Out Of Daily Demand Zone
In the past couple of hours we have seen USD/JPY make a sharp rise up out of the daily demand zone it has been in for the last few weeks. I’m not sure if this move up is going to hold or not, but if it does then I think a move up to the sell zone seen between the 114.993 – 115.608 levels is probably going to take place by the end of the week.
The market didn’t re-enter the zone I said to watch for entries long in last Friday’s market commentary before moving up, but if the current move up continues and the market manages to close above the high, then the zone will become a buy zone we can use to look for long entries in the future. I think if the market does move into the sell zone seen at the top of the image it will probably cause a reaction to occur, it may even push the market back down into the buy zone that will be created if a move into the sell zone takes place.
Tonight watch to see if the market is able to break further above the high and move into the sell zone. If it gets close to entering the sell zone begin watching the buy zone for entries long, as we’ll know for sure then the buy zone has been created by the bank traders placing buy trades.
AUD/USD – Large Drop Out Of Daily Supply Zone
Last night we saw the market make another run into the daily supply zone the market has been drifting in and out of for the past week. Like the other moves into the zone we have seen over the course of last week, this latest move has also resulted in a drop, only this one has been much much bigger than all the other drops out of the zone we have seen occur so far.
The fact that this drop has been much bigger than the rest suggests the banks are getting sell trades placed to make the market reverse, either completely or back into the daily buy zone seen at the bottom of the image. This can’t be confirmed until the market actually breaks through the buy zone it’s close to entering now but it is looking likely based on the price action I’ve seen form so far. If the buy zone does get broken I recommend you begin looking for entries short in the sell zone I’ve marked inside the daily supply zone.
This sell zone marks the point where the bank traders have got sell trades placed if they have in fact been placing trades to make the market reverse. If they’ve been unable to get all of these sell trades placed, they may make the market move back up to this point so they can generate buy orders to use to get the rest of their sell trades executed, in which case we’ll see a move down begin once the market enters the zone