EUR/USD – Daily Supply Zone Almost
The daily supply zone we saw the market retrace back into in yesterday’s market commentary has almost been broken today, by a large move higher which began in the early hours of this morning. The move higher has pushed the market all the way up to where the highs of the daily supply zone are found, it’s looking likely that if things stay as they are now there is a high chance we could see this daily supply zone broken either sometime tonight or tomorrow.
The move up which caused the drop out of the supply zone to come to an end, has created a demand zone you can use to watch for entries long if you see the market continue to move up and break through the daily supply zone, as it consists of the most recent points where the bank traders could have got buy trades placed into the market. If they have been unable to get all of their buy trades placed, they could make the market drop back into this zone soon after it has broken through the daily supply zone, so watch for bullish engulfing candles to form if you see the market drop back into the zone tonight or tomorrow.
If a sharp drop takes place whilst the market is still inside the daily supply zone it could be a signal that we are beginning to see the market reverse. In the event of this happening you still need to keep an eye on the demand zone created by today’s move up, because it’s likely the move back up to the point where the drop originated from will begin from this zone.
USD/JPY – Falling Into Daily Buy Zone
The down-move created by the drop out of the daily sell zone has today finally caused the market to drop back into the daily buy zone. An initial consolidation took place just on the edge of the zone last night, but this came to an end this afternoon when the market actually started to drop back into the zone.
I don’t think it’ll be long now before we start to see signs of the market reversing out of the zone. Currently the price is around the halfway point of the zone and has just this past hour dropped through the 112.000 big round number, which is a signal that we may see it reverse soon due to the way the market often reverses soon after touching or passing through big round number levels. If we see the market reverse we’ll have to monitor the structure to see if it’s going to cause the market to move back into the daily sell zone and continue the consolidation or cause a slight retracement to take place.
If it causes a small retracement to occur I think the supply zone I’ve drawn from the consolidation which took place last week is a likely place for it to come to an end, due to the fact it’s the most recent point where the banks got a large number of their sell trades placed. For now I don’t recommend you take any action in the market until you see how the move out of the daily buy zone forms.
AUD/USD – Large Drop Currently In Progress
Currently we are seeing a large drop take place inside the daily supply zone the market entered on the 15th. I said yesterday how a sharp drop would be a good signal we are seeing the market reverse, and the drop forming right now has the potential to become this sharp drop so long as it is able to continue over the next few hours.
Ideally we want to see the market drop down to somewhere near the point where the current lows have formed, if it just stops where it is now and begins moving higher, I think it’s more likely to have taken place as a result of the bank traders taking profits off their trades instead of them placing sell trades placed to make the market reverse. If we do see the drop continue down to the current lows begin watching the supply zone I’ve drawn from the source of the drop for entries short, as it’s likely for another swing high to form up here if the bank are indeed are indeed getting sell trades placed to make the market reverse.