EUR/USD – Falling Towards Demand Zone
The retracement which I said would probably occur in yesterday’s post has taken place today, but so far it hasn’t caused the market to fall back to the point where the demand zone I said to watch for entries long formed.
USD/JPY – Possible False Breakout ?
The consolidation USD/JPY has been in since the end of last week has come to an end today, with a breakout to the upside taking place late last night. Even though a breakout has taken place, I wouldn’t be too hasty to say that it means we’re now going to see the market move higher over the coming days, as there’s a high chance this could just be a false breakout created as a means to trap traders into placing trades in the wrong direction.
The move up which caused the breakout to take place has created a demand zone I suggest you watch in the event of the market falling from where it is now. This demand zone isn’t a point where I think you should watch for an entry long, but it is a point I believe the market will react to if it begins to drop. If it moves higher tonight, and manages to climb up to the 112.500 level, the demand zone is valid for trading and you should use it to watch for entries into long trades.
AUD/USD – Large Drop Could Be The Beginning Of Reversal
The small retracement we we’re seeing take place yesterday grew much bigger in the hours after my market commentary was published. Today we have seen the market move back up a bit, but over the past couple of hours the price has dropped, and is now falling once again.
The fact the retracement was so deep, leads me to believe that it’s taken place as a result of the bank traders placing sell trades to make the market reverse, instead of taking profits off buy trades they already had open. If they have actually got sell trades placed it’s unlikely they’ve been able to get all of their trades placed at one price. This means they’re probably going to make the market move back up to the point where their trades have been placed to get the rest executed at a similar price.
The supply zone marks the point where they’ve possibly got some of their sell trades placed, so I’d keep an eye on it for entries short if the market moves back up to the zone later on tonight.