EUR/USD – Daily Supply Zone Broken By Large Move Higher
Today we have seen the daily supply zone the market has been in since the 17th March broken by large up-move, which started when the market re-opened for trading last night. The up-move started after a gap occurred due to the planned health care reforms in the US failing to materialize. The fact the market has now broken through the supply zone suggests we are going to see a move back up to the 1.13000 level take place over the coming weeks.
Currently we are starting to see some signs of profit taking enter the market in the form of large bearish candles appearing during the move up. I think it’s likely we’ll see a retracement take place soon, due the fact the move up through the daily supply zone has been quite sharp, and has pushed the market a reasonably large distance past the previous high which was made last week.
If a retracement does occur, the demand zone I’ve marked inside the daily supply zone is the point you need to be watching for entries into long trades, as the move higher means that it’s now the most recent point in the market where we know the bank traders have got long trades of their own placed.
USD/JPY – New Lower Lows Forming After Decline
The drop through the daily buy zone which occurred last week has continued today, with the market again falling to new lows after it looked like a retracement was going to take place at the end of last week.
When Friday’s market commentary was published, the market was in the process of falling back towards the lows which formed on Wednesday and Thursday. Another low ended up forming when the market came close to breaking through the lows, but the resulting up-move could only push the market back to the edge of the daily buy zone, instead of causing a full on retracement to take place. Although a retracement didn’t occur, the drop seen today has caused a supply zone to form which we can now use to look for short trades if a retracement develops over the next couple of days.
Tomorrow keep an eye on the supply zone inside the buy zone for entries short. The way the current price action is looking suggests that a base is building for a retracement to occur, so we may see a move into the supply zone take place sometime tonight or tomorrow.
AUD/USD – Supply Zone Potentially Forming
Today we have seen AUD/USD retrace slightly towards the daily buy zone it ended up breaking in the middle of last week.
As you can see, this afternoon the retracement has come to an end, and the market is now making its way back towards the current low created last Friday. If the market manages to break through this low by a reasonably large distance (i.e over 40 pips), it will be a sign we are going to see further down movement take place this week, and you should begin watching the supply zone marked at the source of today’s drop for entries into short positions.
If the drop doesn’t continue, and stalls at the point where the current lows have formed, it’s a sign we might be seeing the beginning of a larger retracement take place, and you should start watching the supply zone inside the daily supply zone for entries short.