EUR/USD – Falling After Gap Lower
EUR/USD is currently falling after a gap occurred when the market opened late last night.
The price continued to fall once the market had gapped lower until the open of the London session caused the price to rise back into the gap and subsequently fall lower again, breaking the low made by the rise into the gap and telling us the momentum is still to the downside.
We can also see that sell stops are beginning to build up around the 1.0960 – 1.0970 level. A fall into these stops may provide us with a possible entry long so long as a bullish engineering candle appears inside the area where the stops are found. If this turns out to be the case and we see the market move up, watch for a break above the high to confirm further up-wards momentum.
USD/JPY – Slowly Moving Lower
USD/JPY also gapped lower when the market opened last night but has found it difficult to move a large distance lower over the course of today.
You can see how the market has only managed to move a small distance lower since the open last night. Similar to EUR/USD we also have a collection of sell stops building up just below the current market lows.
Note the large spike in open orders just below the 101.50 level, these stops have been placed by traders who have placed buy trades on the last move higher you can see on the charts. Watch for a price action signal to get into a buy trade if the market hits these stops. A bullish pin bar can be used just make sure the wick definitely hits the stops, use Oanda’s graph to confirm this. A bullish engulfing will also do for a long entry so long as you know the stops have been hit.
AUD/USD – Big Drop After Filling The Gap
AUD/USD has also fallen lower today after the gap that occurred at the market open was filled.
After filling the gap the price began to fall and is now back in the zone where the bank traders have placed buy trades in the past. I don’t think the banks will end up placing more buy trades now, if the previous up-move failed to continue up to the high of the drop caused by the brexit then it’s unlikely for a new up-move to develop and break past the highs.
For now I would watch the supply zone marked in the image, a return to this zone could provide us with a potential short trade so long as a bearish engulfing candle forms within the zone