EUR/USD – New Low After Hitting Sell Zone
Today EUR/USD has continued its decline which began yesterday when the market hit the sell zone suspected to have been caused by the bank traders placing sell trades.
The drop has managed to break the low that was made when the market fell into the demand zone and moved higher yesterday, the new low still isn’t technically confirmed yet because the market hasn’t broken it by more than 30pips but in my opinion it should not be long now before another drop takes place and confirms that we do actually have a new low in the market. As far as entries short are concerned the supply zone I’ve marked in the image is the closest most logical place to look for a sell trade as it’s the last point where the banks got sell trades placed into the market.
Although the sell trades they placed here were not as large as the trades which caused the market to fall when it entered the sell zone I still think it’s likely for the market to reverse if it does end up making its way back to this supply zone over the next couple of days.
USD/JPY- Retracement Potentially Beginning
The large retracement which I’ve mentioned in some of my recent posts may finally be starting today with the market moving higher from the lows.
We can see the market fell early this morning around the time the London trading session gets underway. It could be that this fall was caused by the London traders taking some profits off the long trades they may or may not have placed when the market opened yesterday. The fact yesterday’s low was made when the London session began gives us further confirmation that this is a likely scenario.
The new area I’ve drawn around the lows made today and yesterday is the place we now want to be looking for entries long. If this move up has been created by the bank traders placing buy trades they may not have been able to get all of their buy trades placed at the lows which means another move down into the area around these lows could be possible so the banks can get any remaining buy trades placed into the market.
AUD/USD – Supply Zone Created By Move Lower
The bearish engulfing candle that had just formed when I published yesterday’s post did end up causing a supply zone to form but we have yet to see the market return to this zone.
As you can see from the image the market continued to fall once the bearish engulfing candle had formed. Eventually the market had fallen to the point where the last swing low had formed and it was as this point where we saw buying enter the market and cause a sharp move higher to take place. The buying was not enough to push the market back up to the supply zone created by the bearish engulf and during this afternoon the market has began to fall towards the lows again.
If the market is able to break through the lows marked in the image then I would watch for an entry short in the supply zone that has formed from the drop seen this afternoon. In the event of the market not breaking the low the supply zone created by the yesterday’s bearish engulf is the place you want to look for an entry short.