Market Commentary 06/05/16

EUR/USD – NFP Nearly Spikes Upper Demand Zone

The NFP came out this afternoon and caused a large spike higher which nearly touched the upper supply zone we looked at yesterday.

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The first supply zone wasn’t able to push the price lower, by the time the NFP came out it was likely for the zone to be broken anyway by the increase in volatility. When the NFP was released the price shot upwards which would have caused many retail traders to enter buy trades, the banks then used these buy trades to either take more profits off existing buy positions which they placed a while ago or place sell trades in anticipation of an impending move lower.

Next Monday it’ll be interesting to see which way the market begins moving, personally I feel like the retracement is not over yet and we are still in for some more downside, but really there needs to be a break of the current low to confirm this.

 

USD/JPY – Momentum To The Downside After NFP

The release of the NFP news caused a drop in the price of  USD/JPY, the question now is if the downside momentum will continue and break the lows of this retracement or will it stop and turn other way.


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It may be that we see the price reverse when it’s in proximity to the low of the retracement, a decline this far would make retail traders think the downtrend is continuing and cause them to place sell trades which the bank traders may use to take more profits off their existing sell positions. If they do this then its possible a bigger retracement may take place and the banks might try to place more sell positions at the top retracement.

On Monday I would keep an eye on the zone marked above, if a deep pullback is going to take place then its likely for the price to reverse somewhere inside this zone because it will be at this point where most retail traders will be going short in the market.

 

AUD/USD – RBA Announcement Causes Decline

There was a subdued reaction to the NFP release on AUD/USD but the RBA announcement did cause the price to decline when it came out last night.

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As you can when the NFP was released it caused a spike up and a spike down so there isn’t really much information we can gather from it, on-top of this there doesn’t seem to be any nearby technical levels we can use to possible get an entry short which means for now trading opportunities are limited. We don’t want to try to predict where the current downmove will end as that would mean using old technical levels which probably don’t have much significance any more.

I think the market will fall when trading resumes on Sunday evening so its likely there will be more structure present by the time we get to open of the London session which we can use to look for short trades.

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