EUR/USD – Supply Zone Broke By Large Move Higher
The supply zone which the market had just started to react to when yesterday’s market commentary was published has been broken today. The fact that it’s been broken, means that it’s likely we are now going to see the market continue to rise for the rest of the week, although we’ll probably see some profit taking occur as well, as the move up will have caused the profits on the bank traders buy trades to increase by a large amount.
You can see the supply zone which the market was reacting to didn’t cause a large drop to take place as I assumed it would in yesterday’s post. Instead, a small retracement occurred before the up-move which broke the zone got underway around the time the London Trading session began. As far as entries are now concerned, at the moment I can’t see any levels which we can use to monitor for entries into long or short trades. I think the best course of action for now, is to wait until the profit taking causes a retracement to occur and then see if any new levels we can use are created when it comes to an end.
USD/JPY – Stuck Between Today’s Low And Yesterday’s High
The up-move created by the large bullish candlestick which formed just before yesterday’s post, didn’t cause the market to break above the high of the drop we saw on the 12th May. Instead it started to fall back down to yesterday’s lows once it had reached the source of the drop. Today it’s recovered slightly, but still remains below yesterday’s high and above today’s low.
It’s tough to say where USD/JPY is likely to move now. USD/JPY and EUR/USD have an inverse correlation with one another, so I would’ve expected to see USD/JPY fall sharply today due to the rise we’ve seen on EUR/USD. The fact that it hasn’t really fallen at all, suggests we seeing some sort of deviation from the correlation. I mean they’re not perfectly correlated anyway, so they’ll never always do the same thing at the same time, but I still would’ve expected to see some sort of drop occur, due to the size of the up-move which caused the supply zone to break.
For now, I can’t recommend taking any further action until we see more structure form.
AUD/USD – Moving Higher After Drop
AUD/USD is currently moving higher again, after a drop which began when yesterday’s market commentary was published occurred last night.
The drop pushed the market down to around the point where the up-move originated from, before it ended and started moving higher again. Now that it’s moved higher, it looks like the current high could be in danger of being broken later on tonight. If that occurs, it will be a signal that further upside is to be expected tomorrow and Thursday, and it will also mean the demand zone I’ve marked will be valid for trading. For now just continue monitoring the price action.