Market Commentary 02/02/17

EUR/USD – Supply Zone Broken

Today we have seen the market move up and break through the supply zone we saw form from the drop which took place yesterday afternoon. Although the supply zone has now been broken, the current price action is suggesting another move down may take place, so we’ll have to monitor the situation closely over the next few hours.

Today’s move into the supply zone has created a new demand zone. I don’t know yet if this demand is suitable for trading, but it is the most recent point where the banks could have got a large number of their buy trades placed, so its likely we’ll see some kind of reaction occur if the market drops into the zone tonight. For now I can’t suggest placing any long or short trades, the market’s a bit confusing at the minute so it’s best to wait for more price action to form before deciding whether it’s best to go long or short.

 

USD/JPY – Buy Stops Building At the 112.00 Level

After moving back up towards the high of the daily demand zone yesterday it looked like another move out of the zone was likely to take place today. Unfortunately a move has out of the zone has not took place, and instead the market has dropped all the way back to the swing lows created by the large drop which occurred on Tuesday.

A large number of buy stops have accumulated just below this swing low at the 112.000 level. If the market drops into these buy stops we could see a stop cascade take place and that may push the market the bottom of the daily demand zone. If this occurs then the white sell zone marked on the image is the point where you should begin watching for entries short as it’s the most recent point in the market where the banks may have got sell trades placed. If you see the market break through the buy stops and then begin moving higher again, expect to see some kind of reaction occur once it reaches the sell zone.

 

AUD/USD – Large Move Higher Through Sell Zone

The drop out of the sell zone which was taking place yesterday came to an end a few hours after my market commentary was published. Once it had ended a large up-move began and this up-move has pushed the market through the sell zone which caused the drop and into the daily supply zone that formed last November.

I do think we’ll see a down-move out of this daily supply zone take place sometime in the couple of weeks, but I don’t think the bearish price action we are seeing now is the beginning of the down-move out of the zone. The up-move through the sell zone has created a daily buy zone which we can use to look for entries long if the market drops out of the daily supply zone in the future. As far as entries are concerned nothing really sticks out at the minute, so we’ll just have to wait for the price action to create some levels we can use to look for trades.

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