Readers, I just wanted you to let you know that I’m going on holiday for a week tomorrow, so there won’t be any market commentaries next week nor will you receive updated daily supply and demand zones and support and resistance levels. I’ll be back on the 11th, so things will resume as normal on Monday the 13th.
EUR/USD – Sharp Move Out Of Demand Zone
In yesterday’s market commentary we saw the market return to the demand zone which had caused a retracement to occur on Wednesday. It seemed likely this demand zone would break after another small retracement had taken place, which is what we started to see last night. But this morning a sharp move higher occurred which caused the retracement to become much bigger, and the market is now sitting around the point where the original retracement caused by the demand zone came to an end.
The fact the move out of this demand zone has been so sharp does suggest we are seeing the beginning of a reversal back to the upside form, but this will only remain true if the market is able to sustain itself over the next few hours. If it manages to drop back to the point where this up move began around 10:00 am this morning, then it would be a sign the bank traders have created the move up as a means to get more sell trades placed into the market. If this drop does occur, begin watching for entries short in the blue sell zone, as the drop will confirm that the retracement which ended yesterday and the drop itself, will have taken place as a result of the bank traders getting sell trades placed into the market.
USD/JPY – Slight Retracement Suggests More Profit Taking
The move into the supply zone we had seen take place yesterday has not continued today. Instead we’ve seen the market retrace slightly almost back into the daily demand zone it broke out of yesterday. The market is now back inside the supply zone, but I’ve got a feeling that another larger retracement is going to take place at the beginning of next week.
We could see the beginning of this retracement form before the market closes tonight. If it does I suggest you continue to watch for entries long in the zone I’ve marked with black lines in the image, as this zone marks the most recent point in the market where we know the bank traders have got buy trades placed.
AUD/USD – Small Up-Move After Hitting Daily Demand Zone
Yesterday we saw a large down-move occur on AUD/USD. The size and extent of this move down has made it very likely we are seeing the beginning of a large reversal back to the downside take place in the market. Today we have seen the market react to the daily buy zone that formed at the bottom of the last major swing higher which took place at the end of January. How the market now reacts to this daily buy zone will give us clues as to whether we are going to see the market break through the zone or move back up into daily supply zone it’s just fallen out of.
We have seen a little move higher out of the zone take place this afternoon, but I don’t think this is the beginning of a potential move back into the daily supply zone the market fell out of yesterday. In my opinion I think that if a sharp bullish movement originates from this buy zone sometime next week, it’s a good signal a move back into the daily supply zone is going to take place. If only a small move higher begins from the zone, or a move higher begins but is then engulfed by large bearish candlestick, I think a drop through the buy zone will occur.