EUR/USD – Moving Higher After Large Drop
EUR/USD is currently in the process of moving higher after suffering a large drop shortly after yesterday’s market commentary was published.
The drop caused the market to fall through the tiny zone I had said to watch for entries long in yesterday’s post and continued to fall until it came into contact with the small pause that took place during the move higher. With the market now moving back up I think it would be a good idea to watch for entries short in the supply zone created by last nights drop.
There’s a high chance this supply zone has been created by the bank traders placing sell trades to make the market reverse, this is due to the fact the drop has originated close to the point where the previous drop took place on the 15th September. If the banks were unable to get all of their sell trades placed when the market was moving higher yesterday, they’ll make the market move up again in order to get people to place buy trades as they can then use the buy orders to fill any remaining sell trades they have left over.
If the market continues to move up watch for a large bearish engulfing candle to appear inside the supply zone, it’s possible you may see the market move slightly above the high of the drop before reversing so don’t just assume the reversal is over if the high gets broken by a few pips.
USD/JPY – Bounce Still In Progress
The bounce into the daily demand zone which took place yesterday has continued today but I don’t think it will be long before we see the market drop into the demand zone that was created by the move up out of the daily demand zone take place.
I don’t think we’ll see the market fall back into the daily demand zone now, I think it’s far more likely it will drop into the lower demand zone before turning and moving back to the up-side. I doubt it will occur by the end of tonight but if you see the market fall into the demand zone on Monday watch for an entry long because if the market is going to move up from the demand it will move back up to the highs of the large drop which occurred on the 21st as this is the most recent point where the banks may have got sell trades placed into the market.
AUD/USD – Currently Inside Zone To Watch For Entries Long
At the moment AUD/USD is inside the zone I said to watch for entries long in yesterday’s post.
We can see there was a large drop into the zone when the London trading session began this morning, since then we have seen the market attempt to move out of the zone but this move couldn’t break the high of the large drop into the zone. Now we are seeing the market drop again and this drop may end up causing the market to break through the low of the zone itself. If this happens the supply zone seen at the high of the drop lower is where you want to be looking for entries short as the drop through the zone would suggest the whole move down has been created by the banks placing sell trades to make the market reverse.
Currently it still looks as though we are going to see a continuation of the up-move which began on the 21st, so for now keep an eye out for bullish engulfing candles to appear inside the zone as that would be a strong signal the next move higher is about to begin.