EUR/USD – Moving Towards Current High
The move down we were seeing yesterday did cause the market to fall below Friday’s low. Once the low had been broken the market continued to fall, but reversed just before it could hit the demand zone drawn from the upmove which took place on the 18th. The market is now moving up towards the current high and I think there’s a good chance this high could get broken later on tonight if the current momentum continues.
If the market manages to break through the high it’ll be a sign more upside is likely to take place over the coming days, but if a sharp drop originates from around point where the current high formed, it would be a signal the banks are getting sell trades placed to make the market reverse.
For now I think it’s best to wait to see what the market does when it returns to the point where the current high formed.
USD/JPY – Demand Zone Broken
The consolidation the market was in yesterday came to an end shortly after my market commentary was published. The market has since fallen and broken through the demand zone that caused the retracement to take place at the end of last week. This means the supply zone I marked a couple of posts ago is now valid for trading if the market moves back up.
Even though the demand zone has now been broken it’s not been broken by a large distance, which suggests that we could see a move higher back into the supply zone take place sooner rather than later. If a move does occur, you want to watch for a large bearish engulfing candle to form before getting your sell trade place. If the drop out of the zone isn’t sharp, i.e doesn’t consist of multiple bearish large range candles, it’s a sign a move up through the zone is likely to take place, so make sure you close your trade or at least move stops to secure some profit.
AUD/USD – Moving Higher From Demand
Today we’ve seen the market move higher after dropping into the demand zone that formed last week.
Friday’s low which the market was falling back towards yesterday did get broken when the market spiked into the demand zone. Checking Oanda’s Order Book reveals that some sell stops had built up around the 0.7420 level, so it could be that the bank traders made the market drop through these stops as a means of getting more buy trades placed, or to take profits off sell trades they’ve already got open. There’s no way to tell which it is yet at the minute, so I think it’s a good idea to wait for more price action to form.