Market Commentary 04/04/17

EUR/USD – Possible Base Still Forming

Last night we did not see the market drop and create a supply zone from the consolidation, so at the moment a base for the retracement is still potentially forming in the market.

Like yesterday, the market has actually made a new lower low today, but as you can see it only broke the previous low by a small number of pips, so it doesn’t signal anything significant at the moment. As far as going long or short is concerned, the outlook remains the same as yesterday. If you see the market drop tonight, mark an area from the source of the drop up to the current high you can see I’ve marked on the image. If you see the market rise, watch for signs of a reversal taking place when it enters the supply zone.

 

USD/JPY – Reacting To Current Lows

The drop through the lows which we were seeing take place when yesterday’s marked commentary was published continued last night, and today the market has managed to fall all the way back down to the current lows which formed on the 27th and 28th March.

Currently it’s reacting to the points where the current lows have formed. We could see a retracement or even reversal take place from here, so we’ll have to watch the price action that forms tonight to see which one it’s going to be or if the market is going to continue falling. With things looking the way they are now, I think a retracement is certainly possible, but this could change to a reversal if we see a sharp move higher take place with multiple bullish large range candles forming in a quick succession to one another.

The break of the low we saw occur when yesterday’s marked commentary way published means the supply zone created at the top of the current swing down is now valid for trading, so if you see the market continue to move higher tonight, make sure you watch the zone for entries short.

 

AUD/USD – Current Low Broken By Large Drop

In yesterday’s post we were seeing the market react to the current lows it had dropped into earlier on in the day. Today we have seen these lows broken by a large drop which began early this morning just before the London trading session opened. The fact the low has been broken means that it’s now looking likely a move down to the daily demand zone found at the 0.75245 – 0.74885 levels is probably going to take place by the end of the week.

I expect some sort of retracement to take place soon, either when the market drops into the daily demand zone or just before it actually hits it. When large drops like this occur, with little buying taking place during the drop itself, it’s a good signal a retracement or consolidation is going to take place sometime soon, because the drop is fueled by the traders who went long during the up-moves seen inside the supply zone closing their losing long trades at a loss. When these traders have all exited their trades and are beginning to go short, the banks start to take small profits off their trades, which shows up in the price action as more bullish candles and  candles with wicks forming on the chart, which is what you can start to see is happening on the down-move above.

I don’t think we’ll see the market drop into the daily demand zone tonight, so for the moment I suggest you continue to watch for entries short in the supply zone I’ve marked on the image.

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