Market Commentary 03/02/17

EUR/USD – Demand Zone Broken By Drop

Yesterday we saw the market move up and break through the supply zone that had formed from the move down seen on Wednesday. The demand zone which formed at the bottom this move up has now been broken, but a move up from the demand zone seen below started a couple of hours ago so we might now see a move back up to the highs of the drop take place.

A small pause occurred when the market reached the demand zone marked in blue, but this did not cause any significant up-movement to occur and the zone ended up being broken just a few hours after the market tested it. A drop into the demand zone below then took place and this demand has pushed the market back up to around the halfway point of the swing down. The question now is whether this up-move will continue and push the market back above the swing high created at the top of the swing down, or if we’ll see the price drop below the demand zone which is causing this move higher to take place.

I’m not sure which it’s going to be at the moment but I think that if a move above the high occurs, we’ll see the market move up to the highs of the daily supply zone over the course of next week.

 

USD/JPY – Falling From Sell Zone

USD/JPY is currently falling after spiking into the sell zone I drew from the two drops which took place on Tuesday and Wednesday. The market is now dropping back towards the swing low created by yesterday’s move up. If this swing low winds up being broken it’s a sign we are likely to see more downside take place next week.

The move up into the sell zone began literally just after yesterday’s market commentary was published. The buy stops which I said had been accumulating around the 112.000 level did not get hit in the end, and they started to reduce after the market began moving higher again. Right now there are still some orders left at the 112.00 level but not enough for me to consider it as being significant so don’t expect a stop cascade to begin when the market hits the 112.00 level. As for entries I still suggest you keep an eye on the sell zone. It would have been difficult to get an entry short placed when the market entered the zone today, but I do think another move into the zone could take place if the market fails to break the current low by a large distance, so watch for bearish engulfing candles to form in the zone next week.

 

AUD/USD – Sharp Move Back Into Daily Supply Zone

The bearish price action we were seeing form on AUD/USD when my market commentary was published yesterday caused a retracement to take place last night but today this retracement has come to an end and a sharp bullish move higher which began a couple of hours ago is now threatening to cause the market to break through the highs and move deeper into the daily supply zone.

If we see the market break through this high it’s a signal we’re probably going to see a deeper move into the supply zone take place next week. If we see the market drop before breaking the high or the market only manages to break through the high by a few pips, I reckon a move down into the demand zone created by today’s move higher will occur. This demand zone is suitable for trading but only if the market breaks through the high of the drop, if it doesn’t break through the high just wait for Monday’s market commentary to come out before looking for long or short trades.

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