EUR/USD – Daily Buy Zone Almost Broken
The daily buy zone the market dropped into last Friday has almost been broken today, with a large drop pushing the market down to the lower edge of the zone.
So far the market hasn’t actually broken the buy zone but I dont think it will be long before see another drop cause the market to break through the zone. The fact the market has been falling for quite a while now, leads to me to believe that soon we’ll see some kind of pullback take place, possibly back up to the supply zone marked on the image. When the daily buy zone the market is in now gets broken, the next point of interest will be the daily buy zone seen below at the 1.0453 – 1.0631 level.
This buy zone is really important because it marks the point where the downtrend stopped due to the banks taking profits off their trades. In total, three up-moves have developed when the market entered this buy zone, two of these are likely to have been from the bank traders taking profits off their trades, and the other is probably from them taking profits in order to make the market move up so they can get more of their sell trades placed ready for the next phase in the downtrend. I think we will end up seeing a move higher take place when the market enters this buy zone, it might not be as strong as the three previous up-moves we have seen but I reckon it will push the market back up to the 1.0800 level.
For now keep an eye on the supply zone seen in the image. I don’t think we’ll see a retracement back up to this zone take place tonight but we might see one take place by the end of the week so watch for entries short if the market enters the zone.
USD/JPY – Continued Ascent Higher
USD/JPY has continued it’s climb higher today with the market braking though the high made last Friday. It’s looking likely the market is now going to move into the daily sell zone seen at the 110.688 – 114.861 level.
This daily sell zone might cause the market to completely reverse back to the downside, but I think it’s much more likely to just cause a large retracement to occur. We’ll have to wait and see what happens when the market enters the zone. As far as trades are concerned, the demand zone which formed due to today’s move higher is the closest place where I would look for an entry long. The previous demand zone which formed when the market moved up last Thursday is not suitable for trading now, due to the fact the new demand zone would’ve been created by the banks placing a much larger number of their buy trades into the market.
If the market returns to this demand zone watch for a bullish engulfing candle to form before going long.
AUD/USD – Consolidating Inside Daily Demand Zone
At the moment AUD/USD is consolidating inside the daily demand zone the market fell into at the end of last week, we have seen the market drop down to the lows of this consolidation in the past few hours so it might not be long before we see the consolidation broken along with the daily demand zone.
As you can see a drop down towards the consolidation lows is taking place right now, I’m not sure if this drop is going to cause the market to break through the consolidation lows or if it’s going to fail and move higher again. If it fails, watch the supply zone that formed last week for entries short as this is the most recent point where the banks have a got a large number of sell trades placed into the market, a break above here would suggest the market is reversing back to the upside so be on the lookout for entries short when the market enters the zone.