EUR/USD – Falling Out Of Sell Zone
During my time away last week we saw EUR/USD fall back towards the demand zone (which is now a buy zone) that caused a sharp move higher to take place in my previous market commentary. Although the market didn’t actually fall into the zone, it did start moving higher and by the end of last week it had managed to move above the highs which had formed at similar prices to one another at the end of February and the start of March. The fact that these highs have been broken suggests that we are now going to see a move up to the daily supply zone seen between the 1.0752 – 1.0828 levels take place, as this is the main point where the bank traders will have got a large number of their sell trades placed if they did in fact want the market to reverse.
I don’t think the retracement out of the sell zone we’re seeing now will continue for much longer. I think a move higher will begin either tonight or early tomorrow morning and push the market back above the retracement high towards the daily supply zone mentioned in the introduction. Although I don’t think this retracement is going to continue I’m not sure where it will come to an end, so at the minute I think it’s best to wait for more price action to form before looking for an entry long or short.
USD/JPY – Falling Out Of Daily Sell Zone
Last week we saw the market consolidate around the price action zone where I said to watch for entries long in the market commentary I released on the 3rd. The market twice dipped into this zone before moving back out, and on the second touch a new move higher began and caused the market to break above the high made on the 3rd of March. The market is now inside a daily sell zone but is currently falling, and it looks like it will end up falling out of the zone sometime over the next of hours.
At the moment I’m not sure if the market is falling out of the sell zone because the bank traders have got sell trades placed, or if it’s just retracing as a result of the bank traders taking profits off buy trades they’ve already managed to get placed. With the price action being the way it is currently I’m leaning more towards it begin a reversal, due to the fact the drop which created the supply zone marked above was quite sharp, and the swing high created by this drop has formed at a similar price to where other major swing highs have formed, which is a sign the banks could be getting sell trades placed to make the market reverse.
If this is the case then it’s likely we’ll see another move back up to the swing high created by the drop take place, as it’s unlikely the banks have been able to get all of their sell trades placed into the market. If we see this occur then watch for an entry short in the supply zone created by the drop, because the bank traders will aim to get any additional trades placed at a similar prices to one another which will be at a price close to where the swing high has formed.
AUD/USD – Moving Towards Supply Zone
The reversal which we had just seen begin before I went on holiday continued throughout last week, but today we have seen a retracement occur and push the market up towards a supply zone that happened to form from the beginning of the last swing lower which began last Tuesday.
I still think we’re going to see the market continue falling so I’d watch for entries short inside the supply zone created by the drop. If a large bearish engulfing candle forms inside the zone or you see a sharp drop out of the zone take place, it’s a good sign the market is going to fall and the downmove is likely to continue.