Market Commentary 07/07/16

EUR/USD – Large Bearish Engulfing Candle May Signal The Beginning Of The Next Down-Move

In my last post we saw how the market had come close to breaking the low which I had marked with a black line and how a stop run had caused the price to start moving higher. Today we have

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Today we have seen the price begin to fall back towards the important low I marked yesterday. A drop took place earlier which created a supply zone that has now been revisited twice, the current move into the zone has caused a bearish engulfing candle to form and this engulf could be the start of the move down which breaks the important low.

For tonight and tomorrow I suggest you watch the price action for signs of a continuation lower, a break below the swing low near to where the price is currently at would give us further indication that the downside momentum is likely to continue. If we see the price continue to drop after this bearish engulfing candle has closed I would mark the top of the engulf as its own supply zone and start to watch for the market to come back into the zone and provide a possible short entry.

 

USD/JPY – Retracement Back Up To Broken Swing Low

Yesterday the market broke through the swing low made after Britain decided to leave the EU, today the market has retraced back up to this broken swing low and has started to move lower.

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The drop which occurred after the market retested the broken swing low caused a supply zone to form which we can use to look for a potential short entry in the event of the market moving back into the zone. Currently we are seeing the price drop and it could be possible this drop creates a new supply zone we can use to look for trades although we need to see the price decline a little more for the zone to become valid.

The swing low which I’ve marked at the bottom of the image needs to be broken in order for the downtrend to continue, at the modem while it looks likely for the price to continue falling it is not confirmed until this low is broken.

 

AUD/USD – Price Failed To Make A New High

The run up caused by the market running into the demand zone has come to an end and the price is now falling.

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Now we need to monitor the low just below the current market price. This low has been created either because the banks have taken profits off sell trades placed when the market came close to the previous swing high or because they have placed more buy trades into the market.

If the market fully breaks the low then it’s a hint that the banks may have been placing sell trades at the highs, if the low doesn’t end just being broken the high of this current move down needs to be watched as a break above here would tell us the low was created by the banks placing buy trades and a continuation higher is likely to take place.

 

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