EUR/USD – Falling Below Wednesday’s Low
It turned out that the small drop we we’re seeing take place in yesterday’s post was not a retracement to a new move higher. It was in fact the beginning of another drop, a drop which today has caused the market to fall below Wednesday’s Low.
The fact that it’s fallen below the low, suggests we are going to see a move into the demand zone take place either tonight or sometime next week. This entire drop we’ve seen occur since the beginning of week could just be a small retracement or it could be the beginning of a reversal to the downside. If it is a small retracement, I’d expect to see the market reverse and move higher somewhere around the point where the demand zone has formed. If it’s a reversal, we’re probably going to see the market move back up and cause additional swing highs to form around the point where the current high has formed.
In either case, I think it’s a good idea to watch for entries long inside the demand zone, as that’s the most likely place we’ll see the market move higher whatever scenario unfolds.
USD/JPY – Retracement Out Of Demand Zone
The false breakout which has been taking place over the past couple of days has now come to an end, and the market has fallen into the demand zone I talked about in yesterday’s market commentary. I said yesterday how I didn’t think it was a good idea trading the zone because it looked like the market was going to continue to falling through it today. So far the market hasn’t broken the zone, but this could change over the coming hours, because a small retracement which began when the market entered the zone earlier seems like it’s now coming to an end.
If the market breaks through the zone I think there’s a good chance the current low marked at the bottom of the image could get broken next week. A break of this low would signal further downside over the coming days, and it would also confirm the supply zone I’ve drawn has been created by the bank traders placing sell trades to make the market reverse.
For now, I think it’s a good idea to watch the supply zone for entries short but only once the market has broken through the demand zone you can see above. If it doesn’t break through the zone, don’t look for entries into trades.
AUD/USD – Small Retracement Near Demand Zone
Yesterday’s drop from the supply zone continued last night, but today we’ve seen a small retracement take place after the market almost hit the demand zone early this morning.
The price action that’s formed over the past few hours does suggest that we are going to see a drop into the demand zone take place either before the market closes tonight, or at some point during next week. I think a move out of the zone will take place once the market drops into it, but I’m not sure yet where this move is likely to come to an end, it might terminate near to where the drop into the zone occurs, or it might caused the market to move all the way back up to the highs, we’ll have to see how it moves out when it enters next week.
At the moment there isn’t any opportunities to really get trades placed, so I recommend you just continue watching the price action for now.