EUR/USD – Moving Towards Current High
The retracement that was taking place yesterday did not cause the market to move into the demand zone last night. Instead it turned upon reaching the point where the previous swing higher originated from. Although the market has now reversed, it has still not broken through the current high that was made on Tuesday.
Currently you can see the market has fallen slightly since moving up towards the high last night. This drop may just be a small retracement before the move which breaks the high gets underway, or it could be the start of a second swing back down to the low I’ve marked with an X. If it’s the start of a second swing, it could be a sign a much deeper reversal or retracement is in the process of forming, but more price action is needed to confirm this.
For now, I suggest you continue to watch the demand zone for entries long.
USD/JPY – False Breakout Still Underway ?
The breakout we were seeing yesterday did not continue last night. The market started to fall a couple of hours after my market commentary was published, and it’s now looking like a bigger move down is likely to take place later on tonight.
I’m not sure if it’s a good idea now to look for entries long inside the demand zone I marked yesterday. I think we will see a reaction take place once the market enters the zone, but I don’t think it’ll cause another move higher to take place, at least not one big enough to cause the market to break above the high created yesterday.
For the moment I recommend you continue watching the price action to see if any new structure forms. I would say to watch for an entry long in the demand zone, but I’m just not confident that it’s going to cause a decent move higher to take place.
AUD/USD – Supply Zone Causes Drop
The supply zone which formed as a result of the large drop we saw take place yesterday has caused a reversal to occur today. The fact that it’s caused a reversal to take place, highly suggests that a bigger reversal back to the downside is potentially underway, or is at least in the process of forming.
It is possible that we could see another move up to the supply zone take place over the coming hours, as the bank traders may not have been able to get all of their sell trades placed using the buy orders they had coming into the market during the time the market was moving higher. If we don’t see another move up take place, a drop into the demand zone is likely to occur, so we’ll have to see how the market reacts to it to determine what it may do next.