EUR/USD – Small Drop After Retracement
Yesterday’s sharp move down did not continue last night, with the market spending most of the night retracing back towards the supply zone which was created by the drop. The retracement came to an end around midnight, the market has continued to fall since then but has so far not manged to break through the low of the retracement.
An hour ago a large bullish engulfing candle formed, the question we have to ask ourselves now is will this engulf cause the market to move up and break through today’s high or will the market stall at the high and move back down towards the retracement low ? If it moves up and breaks through the high, it could be the beginning of the reversal and we’ll probably end up seeing the market break through the supply zone that formed from the drop and move towards the other supply zone seen above. If it doesn’t break the high then I think a move back down to the retracement low will definitely occur, possibly with a spike into the demand zone seen below taking place.
For now you need to keep on eye on whether the market is going to break through today’s high or not, if it breaks expect the supply zone to cause some kind of move down to take place, maybe back down to the retracement lows where the up-move has originated from.
USD/JPY – Reversing Out Of Zone
USD/JPY is currently in the process of falling out of the zone I said to watch for a reversal to occur in yesterday’s market commentary.