EUR/USD – Sharp Move Towards Wednesday’s Highs
Today we have seen a sharp move higher take place on EUR/USD. This sharp move higher has pushed the market back up towards the highs made on Wednesday, and it now looks like we’ll potentially see the market break above the highs by the time the market has closed tonight.
If the highs get broken we may see the market move up to the 1.08733 high sometime next week, before retracing and falling back into a demand or buy zone which has yet to form in the market. If we see the market fall back out of the daily supply zone and into the demand zone seen just below, I think that could be signal a potential reversal out of the daily supply zone is taking place, but we’ll have to see how the move out of the demand zone forms before confirming it as being a reversal.
For now I think you should continue watching the market for new price action to form. There isn’t anything I suggest you do until the market has either broken above the high of the daily supply or broken below the low, so just stay as an observer for a minute.
USD/JPY – Multiple Lows Suggest Retracement
The up-move created by the new lower low that had been made just before yesterday’s market commentary was published, did not cause the market to break above the current high last night. Instead the swing terminated a few pips below the high and has today started to fall back down towards the lower low which created the swing.
I’m not convinced this is the end of the consolidation just yet. I think if we see the market drop down to where the lower low formed there’s a good chance another low will be created and we’ll see the market move back into the daily buy zone and start to retrace towards the supply zone. I don’t think we’ll see this new low occur tonight, but it may possibly at the beginning of next week. If the market doesn’t retrace back into the daily buy zone, and continues to fall well below the lower low I’ve marked on the image, this consolidation will become a supply zone which we can use to look for entries into short trades, as it contains the most recent points where the bank traders would have been able to get short trades placed. (the current high and high seen next to it)
AUD/USD – New Lower Low
As expected the market has today made another lower low. Similar to the low we saw form yesterday, today’s low has only broke the previous low by a small number of pips, which further suggests we are going to see a retracement back into the daily supply zone take place sometime soon.
So far we haven’t seen any signs which tells us the retracement may be about to begin. Really I would want to see a large bullish engulfing candle form in order to believe that the retracement is taking place. Although we did see a bullish engulfing candle form a couple of hours ago, it was not that big due to the selling which took place during the time it was forming, as evidenced by the wick you can see on the candle. If no selling had took place and the engulf ended up closing near its highs, I would have probably considered that to be a signal the retracement is about to begin.
Going into next week, I think you should continue watching the supply zone inside the daily supply for entries short.