Market Commentary 05/07/16

EUR/USD – Stop Run Above The Swing High

Today we have seen the market break the previous high and in the process cause a stop run to take place.

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The market shot up and broke the previous high this morning around 8:00 am which is the open of the London trading session. The buy stops which were triggered by the run up through the high resulted in the bullish candle having a large wick, the high of this candle is what we’ll now use to determine if the market is likely to reverse and move down or start moving higher.

If the banks have placed sell trades using the buy stops which would have been triggered when the high was broken then they’ll not want the market to breach above the high of the bullish candle as it would jeopardize their sell trades and could cause them to lose money. Therefore a break above this high would signal to use that the banks haven’t placed sell trades and have in fact been taking profits off long trades placed when Britain announced it’s exit from the EU.


USD/JPY – Swing Low Finally Broken , Market now Dropping Into Retracement Lows

The swing low which the market has managed to stay above since the 1st June has now been broken and the price looks to be on it’s way back down to the lows.

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The supply zone which we were watching before the swing low was broken is still a place we can use to look for potential short trades if the market returns due to the fact the banks have placed their biggest short trades here and may want the price to return in to this point in order to get more short trades placed.

The other supply zone is another location where we can look for short entries but the market must return to it within the next couple of days otherwise it tells us the banks were able to fill all of their sell trades before the price started dropping.

For now keep an eye on the swing low which the market is currently in close proximity to, a break below this swing would give us further confirmation that the downtrend is probably going to continue over the coming weeks.


AUD/USD – Market Falling Back Towards Used Demand Zone

Last night the price of AUD/USD started to fall and we’re now seeing the market approach the demand zone which caused the move up to occur in the first place.

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I’ve adjusted the demand zone to incorporate all the points where the banks could have possibly placed buy positions. I think what we’re seeing now is simply just a retracement and it wont be long before we see the market to start moving higher again. The demand zone is the last place the banks have placed buy trades so if they are making the market move back to this point in order to get any remain trades placed they will not want the market to break down below the important low I’ve marked.

Tomorrow watch for signs of an impending move higher out of the demand zone, a large bullish engulfing candle than is significantly bigger than the preceding candles is likely to be a good sign that the market is about to move higher.