EUR/USD – Daily Sell Zone Broken
The move out of the daily sell zone we we’re seeing take place at the time yesterday’s market commentary was published has come to an end today, with the market breaking above the highs of the daily sell zone and moving into the daily supply zone seen above. This daily supply zone is where I thought the market would eventually reverse back in December, but the market kept stalling at the daily sell zone so it seemed like a move into the daily supply zone was not going to end up taking place. Since the market has now moved back into the daily supply zone I think we will see some kind of reversal out of the zone take place in the coming day’s or weeks, due to the fact the daily supply zone has formed as a result of the bank traders placing a large number of sell trades into the market.
I think if we are going to see a reversal out of the daily supply zone take place it will occur somewhere above the red line I’ve marked on the image. This red line has been drawn from the points where the bank traders could have got some of their sell trades placed to cause the supply zone to form, so the reversal beginning somewhere above this red line is likely to occur, due to the fact the banks like to get any additional trades placed into the market around the same point as where their current trades have been placed.
For now keep an eye out for signs of a reversal taking place once the market moves above the red line seen in the image. If a reversal is going to occur, it’s likely we’ll see multiple downswings form when the market is inside the supply zone, as the banks won’t be able to get all of their sell trades placed at one price, so don’t worry if you see a big drop place and think you’ve missed out on the reversal because it’s probable the market is going to move back up again to the highs of the swing down before it actually reverses.
USD/JPY – Dropping Deeper Into Daily Demand Zone
Today we have seen USD/JPY drop deeper into the daily demand zone it returned to for a second time yesterday morning.
The drop deeper into the daily demand zone has created a couple of new supply zones we can use to look for entries into short trades if the market begins moving higher. The supply zone which has been drawn from today’s drop, is the one which I think the market has the best chance of returning to if it begins moving higher over the next couple of days, but I think the one found above should also be monitored just in case we see a large spike take place.
I do think we’re going to see the market eventually reverse out of this daily demand zone but not before bigger drop deeper into the zone has taken place, so for the moment I’d keep an eye out for entries short in the two supply zones.
AUD/USD – Daily Supply Zone Broken By Move Higher
In yesterday’s market commentary we saw how the market had begun falling out of the daily supply zone which had formed back on the 15th December. Today we have seen the market break through this supply zone and it now looks to be on its way higher into the daily supply zone that formed at the beginning of November last year.
The drop out of the daily supply zone which took place yesterday was not very strong, which was a sign that the drop may just be a retracement as opposed to a full on reversal. With the highs of the daily supply zone now broken the next point where we could see the market reverse is the daily supply zone found between the 0.7675 – 0.7778 levels. This is the supply zone that falls in line with the point where the upper boundary of the current consolidation sits, so a move back down to the lower boundary could end up originating from here once the market enters the zone.
As far as entries are concerned I’d keep an eye out for signals to get long inside the demand zone that has formed today from the market moving up through the highs of the daily supply zone. This demand zone marks the most recent point in the market where the bank traders have got buy trades placed so a move back into this zone is likely to occur if the bank traders have been unable to get all of their buy trades placed into the market.