Market Commentary 01/09/16

EUR/USD – PMI Release Causes Large Move Higher

At the 3:00pm the US PMI news was released and it has turned out to be negative for USD, this is causing the price of EUR/USD to rise and if things continue the market will soon be inside the supply zone marked back in Monday’s post.

Aviary Photo_131172176640777230You can see the lows that were made yesterday have remained in-tact even though the market fell into them last night, these lows are what we need to be watching from now on because they have formed as a result of the bank traders either taking profits off short trades or placing buy trades to make the market reverse.

It’s unlikely the banks are placing buy trades due to the fact we saw a large drop take place last week and before the drop occurred we saw multiple swing highs form which is characteristic of the bank traders getting their sell trades placed to make the market reverse.

Even so there is a small possibility this current up-move has been caused by them placing buy trades so a break below these lows would tell us the banks have actually been taking profits off their sell trades. Going into tomorrow I would watch the supply zone the market is close to entering for an entry short.

USD/JPY – Large Bearish Engulfing Created By PMI Release

The PMI release has caused USD/JPY to fall with a large bearish engulfing candle forming this past hour.

Aviary Photo_131172186675721570The market did end up returning to the demand zone which I marked in yesterday’s post although it kind of missed the zone by a few pips so it was quite tough to get an entry into a trade. I think the engulf will cause the market to begin falling through the demand zone it’s currently closest to and it may be enough to push the price down into the buy zone I’ve marked in the image.

In the near term I would watch for a retest back into the supply zone created by this bearish engulf, if we don’t see this happen and instead the market continues to fall then keep an eye on the lower demand zone for entries long as this is the most likely place for the current down-move to end.

AUD/USD – Moving Towards Sell Zone

The PMI release has caused AUD/USD to move back up from the lows that we saw form due to the banks taking profits off their trades yesterday.

Aviary Photo_131172187354502961Now the market is not too far away from entering the sell zone which caused the previous drop to take place, this sell zone could end up turning the market back to the downside once it enters but remember to wait for a large bearish engulf to form inside the zone if you plan on using it to go short.