Market Commentary 01/08/16

EUR/USD – Consolidating Inside Sell Zone

Today EUR/USD has continued its sideways movement inside the sell zone which the market entered last week.

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It’s still possible that we’ll see the market fall from this zone due to the bank traders placing sell trades although like I said in Fridays post I think this is unlikely because of how strong the move up has been. The two levels we need to be watching are the breakout zone and the bank buy zone, a drop down to either of these levels is very possible before the next move up begins so be sure to watch for bullish engulfing candles to form when the market is inside the zone.

USD/JPY – Profit Taking Causing Move Lower To Stall

After last weeks heavy move lower it was only a matter of time before the banks started to take some profits off their short trades.

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On the 1 hour chart we can see there have been two bouts of profit taking enter the market, one that began at the end of last Friday and one that started today. If the current bout of profit taking continues I’d expect the market to move up into the supply zone which formed when the market dropped last week.

A move up would cause any of the traders who sold late into the move lower to close their sell trades at a loss which would put buy orders into the market the banks can use to get more short trades placed for the next move lower.

 

AUD/USD – Profit Taking Causing Retracement

AUD/USD has been falling today after the banks began to take profits off the buy trades placed last week.

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It’s likely the down move has been created because of the banks taking profits off the buy trades which caused this move up to take place. If this is the case then the demand zone is the first place we should be watching for possible entries long. This demand was the last place the banks came into the market and executed a large amount of buy trades therefore if the market is to come back to this zone it has a high chance of causing a reversal as the banks will come into the market and protect the buy trades they’ve got placed.

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