EUR/USD – Returning To Sell Zone
Just after yesterday’s market commentary was published the market moved back into the sell zone which had caused the market to drop last Friday. The move back into the zone resulted in another drop taking place, but this drop did not cause the market to fall through the current low, which suggested we might see another move into the zone occur today, which is what we’ve ended up seeing take place over the last couple of hours.
As you can see the market is actually inside the sell zone right now. If the market drops from where it is now or just after breaking through yesterday’s high and moves down through the current low, it will add more weight to the theory that we are going to see the market continue to fall and break through the demand zone seen at the bottom of the image.
If the market breaks above the sell zone and moves above yesterday’s high (marked with an X) watch for entries short in the supply zone. A break above this supply would be a sign that maybe we are seeing the market reverse, and that the swing higher which has been taking place since the 22nd February has occurred as a result of the bank traders getting sell trades placed to make the market reverse, not because they were taking profits off short trades they’ve already got placed.
USD/JPY – Falling Back Into Demand Zone
When yesterday’s market commentary was released we had just seen USD/JPY begin falling back into the demand zone which had caused a retracement to take place earlier on in the day. The large bearish engulfing candle which caused the beginning of this drop made it seem likely we would see the market break through the demand, but a couple of hours after the bearish engulf formed, a sharp move higher occurred which pushed the market back up almost above the previous swing high.
The move higher came to an end before the market was able to break through the high (marked with an X) and the resulting down-move which we have seen today has pushed the market back into the demand zone that caused the move up to take place to begin with. If this down-move continues and we see the demand zone broken, begin looking for entries short in the supply zone created by today’s move lower, as this supply will be the most recent point where the bank traders have got a large number of their sell trades placed.
If the current move down fails and we see the market begin to move back up again without breaking through the demand zone, do not look for entries short in the supply zone, because it will be a signal the zone may not have formed from the bank traders placing sell trades.
AUD/USD – Consolidating Between Buy Zone And Daily Supply Zone
In yesterday’s market commentary we saw the market attempt and subsequently fail to move out of the buy zone it had dropped into last Friday. Today we have seen further attempts by the market to move out of the zone, but like yesterday they have so far all failed and the market is now consolidating between the buy zone and daily supply zone.
At the minute it’s difficult to tell which direction the market is likely to move in. On the one hand it still looks as though we are going to see the market fall, but on the other hand it seems like it could rise, as the consolidation we’re seeing now may be due to the bank traders getting more buy trades placed into the market. For now I think it’s best to wait for more price action to form before going long or short. The supply zone is still valid for trading, but the fact the market has so far been unable to break through the buy zone, suggests that maybe it’s formed as a result of the bank traders taking profits off buy trades instead of placing sell trades to make the market reverse.
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