Market Commentary 03/11/16

EUR/USD – Sharp Drop Caused By Profit Taking

EUR/USD has today fallen slightly after spending most of the past few days climbing higher. The fall is likely to have been created by the bank traders taking some profit off the buy trades they placed before the move up began, so I don’t think it will be long until we see the market continue it’s move higher.

aviary-photo_131226596297226961The current move higher which might end up breaking through today’s high, started after the market almost hit the demand zone I marked in yesterday’s post. The fact it was so close to hitting the demand, leads me to believe that maybe the drawing of the zone was slightly off, which means the market did actually touch the zone it was just not quite correctly drawn as is the case with some of the zones that form in the market.

For now keep an eye on the supply zone which has formed due to today’s move lower. If the market stops rising and begins falling, this supply could be used to look for an entry short, so long as the market has dropped through the demand zone. Another drop would be a sign the market is going to retrace a bigger portion of the move up or maybe even reverse completely, in which case we could see a move up back into the supply zone take place so be on the lookout for bearish engulfing candles if you see the market move back into the supply zone after falling again.

 

USD/JPY – Daily Buy Zone Broken By Drop Lower

Today we have seen the market drop through the daily buy zone it re-entered yesterday. Although the zone has been broken , I don’t think it’s a signal more downside is going to take place due to the fact the market has moved back into the zone almost creating a bullish pin bar on the daily chart.

aviary-photo_131226610945529389You can see from the image how just a few hours after the market dropped out of the daily buy zone,  it started moving back into it again and now today’s high is in danger of being broken if this move higher continues. If the move continues and the high gets broken, I think it’s a strong sign that we’re going to see more up-movement take place next week. It may even be the beginning of the up-move which causes the market to break through the 105.522 high and move towards the daily supply zone seen at the 106.000 level.

Similar to EUR/USD, the demand zone which formed when the market fell out of the daily buy zone is valid for trading so long as the market is able to break through today’s high. A break of the high would give us more evidence the banks are getting buy trades placed to make the market move back up to the 105.522 high, if the banks have not been able to get all of these buy trades placed, they’ll have to make the market fall again into to generate sell orders they can use to get the rest of their buy trades executed. This drop will probably terminate somewhere near the demand zone as this where the banks other buy trades have been placed so watch for bullish engulfing candles to from when the market is inside the zone.

 

AUD/USD – Inside 1 Hour Supply

AUD/USD is back inside the 1 hour supply zone created by Tuesday’s drop, the market did fall out of the zone when the FOMC was released last night, but it has moved back into it today and is actually inside the zone right now.

aviary-photo_131226627290059669Another move into the supply zone took place after the FOMC caused the market to drop out of the zone, this move also resulted in a drop, but one which ultimately failed with the appearance of a large bullish pin bar. Since then the market has basically spent most of the day consolidating with the only real movement higher taking place a couple of hours ago.

As far as entries are concerned I think it’s a good idea to wait for more price action to form before looking for entries long or short. At the moment, with the market consolidating it’s difficult to figure out which way the price is going to move so it’s better to wait for more market structure to give us some clues as to which way the market is going to move.

 

 

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