EUR/USD – Banks Still Taking Profits Off Buy Trades
The profit taking which we saw enter the market yesterday has continued throughout today even though a new higher high was made yesterday evening.
Some sell stops are building up just above the 1.13300 level although currently they do not constitute to a high percentage of traders using Oanda so the chances of them causing a reversal upon being hit is low. The demand zone which I marked in my last post is still a place where we want to be looking for opportunities to get long in the event of the price dropping into the zone.
For now just monitor how the market reacts when it hits the sell stops marked in the image. Check Oanda’s order book every couple of hours to see if the amount of sell stops increases, if they get over 1% then there’s a higher chance of a reversal taking place if the price runs into them.
USD/JPY – Retracement Over Price Now Falling Lower
USD/JPY spent most of yesterday climbing higher against the down-move which took place last week, today we have seen selling come into the market which is likely to have put an end to the retracement higher.
The drop has created a supply zone which we might be able to use for a short trade if a bearish engulfing candle forms inside the zone. There is a chance that the drop we’re seeing now is actually a retracement to the retracement and the price could rise past the high of the supply zone. Even if this is the case the supply zone needs to be watched for a potential short entry because the amount of profit up for grabs if the price falls lower is too big to miss out on.
AUD/USD – Another Big Move Higher
The price of AUD/USD climbed higher last night and has broken past the highs which were made when the banks were taking profits.
The demand zone marked in yesterday’s post was nearly hit by a spike lower soon after my last post was published but unfortunately the price stopped falling when it was 6 pips away from the zone. Today’s move higher has created a new demand zone which the market may return to later on tonight or tomorrow. I think this is unlikely due to how far the market now is away from the zone but it’s still a possibility which we need to take into account.
Tomorrow watch for a retracement as the banks take more profits off their buy trades because of the move higher we’ve seen today.