Market Commentary 06/09/16

EUR/USD – Big Move Higher After PMI Release

A couple of hours ago the USD PMI news was released and it’s come back as being negative for USD, this has caused the price of EUR/USD to sharply rise and I think now its now likely we’ll see the market run up to the 1.1337 high of the previous drop lower.

Aviary Photo_131176516826347571I find it highly unlikely the supply zone is now going to cause the market to reverse, to me the upside momentum is just too strong and I think this momentum will end up continuing over the rest of the week. Today’s move up also casts serious doubt on the theory the banks got sell trades placed at the high created by the NFP. I think it’s possible that really instead of the lows being created by the banks taking profits off sell trades they have actually been created due to the banks placing buy trades in expectation of another higher taking place.

Aviary Photo_131176518208474150Currently it’s too early to say whether this is the case or not, we must wait to see what price action forms when the market reaches the highs where we suspected the banks were placing sell trades. If any large swings lower originate from the region where these highs are located it adds evidence to the idea the highs have formed due to the banks placing sell trades rather than just taking profits off buy trades.

For now just monitor the price action as the market moves higher, the demand zone created by the move higher is a place you can look for long trades but I do doubt we’ll actually see the market fall into this zone over the coming days.

 

USD/JPY – Sharp Drop Due To PMI

Whilst the release of the PMI news has caused the price of EUR/USD to rise, it’s had the opposite effect on USD/JPY with the market suffering an enormous drop upon the news being released.

Aviary Photo_131176519493258328As you can see from the image the drop has caused the market to fall through the zone which I said to watch for entries long in yesterday’s post and it’s looking like the buy zone which you can see marked is also going to be broken possibly by the end of the day.  The outlook now for USD/JPY is one of more downside, I highly suspect we’ll see the market fall into the area where the move higher originated from a couple of weeks ago as this is an important point in the market. For now I think it’s best if you concentrate on looking for places where you can get short trades placed into this downwards momentum.

 

AUD/USD – Supply Zone Broken By RBA Announcement

The supply zone which the market was inside at the time I published my last post was broken by the RBA announcement last night and the price has been propelled even higher by the PMI release two hours ago.

Aviary Photo_131176520910119706You can see from the image how the RBA announcement caused a bullish move to take place which eventually ended up with the high of the supply zone being broken. A small drop then took place around the time the London trading session opened. More buying came into the market before a retracement began which caused the market to fall back to where the small drop had taken place when the London session began. After that the PMI news was released and pushed the price above the highs of the retracement to where it is currently is now. I do think that today’s up-move signals the resumption of the up-trend AUD/USD was in previous to the fall we have seen take place over the past couple of weeks.

This means our focus is now on getting long trades placed into this current upside momentum. I think the two demand zones we have seen form are decent places to look for entries long but I feel like the lower zone has a better chance of causing the market to reverse than the zone above due to the fact the bank traders got a larger number buy trades placed here.

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5 comments

  1. Iggy

    Hi,
    I’ve noticed you use the ADR indicator on some charts, can you share informations where can we download it and how to use it properly.
    Thanks in advance.
    Iggy

    • ForexMentorOnline
      Author

      Hello Iggy

      There will be some articles coming in the near future about how to use the ADR in your trading, as far as downloading the ADR indicator is concerned I’ll have to have a look for the file on my computer, I’m sure I’ve got it somewhere but I downloaded it a few years ago so I might not be able to find it. I think there is a thread on forex factory where it was posted but I can’t remember the name of it so it might be worth searching for it over there.

    • ForexMentorOnline
      Author

      Hi Matt

      In this situation, I probably wouldn’t because although the zone was created by the banks placing a larger number of buy trades than the zone above it’s still not as many as they placed around the lows of this whole move higher. I would definitely watch the zone for a reaction even if it was longer than a week old but I don’t think I would use to get a long trade placed.

  2. Iggy

    Hi “Mentor”
    I found indicator which looks similar to yours somewhere on forex factory and use it on MT4, when I compare the values are almost the same as on your charts (the difference is probably because of time delay, I look to the charts after published), so ok, glad to see some article on this topic soon…
    Iggy

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