Market Commentary 10/02/16

EUR/USD – Buy Zone Broken

The buy zone which the market had begun falling towards when yesterday’s market commentary was published has been broken this afternoon, and it’s now looking likely we are going to see the market drop into the other buy zone which has formed just below the one we’ve seen broken today.

You can see the market has actually spiked the outer edge of the buy zone a couple of hours ago. Whether or not this spike develops into a bigger up-move remains to be seen, but I think the supply zone drawn from yesterday’s highs, which I talked about but forgot to draw in yesterdays market commentary, is the point you need to be watching for entries into short trades, because if the move down through the buy zone has occurred as a result of the bank traders placing sell trades, these sell trades have been placed at the highs this supply zone encompasses.

If they haven’t been able to get all of these sell trades placed, due to there being a lack of buy orders in the market, they could make the market rise out of the buy zone and into the supply zone, as that would cause a lot of people to buy and thus give the bank traders the buy order they need to get the rest of their sell trades placed.

 

USD/JPY – Sharp Move Into Sell Zone

Yesterday we we’re in the process of seeing a large move higher take place which was pushing the market up towards the sell zone that formed close to the outer edge of the daily demand zone the market has been in for the past couple of weeks. Last night that move higher continued and in the early hours of this morning the market entered the sell zone, but has now begun to drop out of it once again.

There hasn’t yet been enough price action for me to confirm whether we are going to see the market drop out of this sell zone and move into the demand that’s formed at the bottom of the move up, or if the sell zone is going to cause a small retracement to take place after which another large move higher will form and push the market through the highs of the daily demand zone. With the price action being the way it is now, I’d say that a retracement out of the sell zone is more likely to occur than a full blow reversal, but this could change depending on how the market reacts to the zone I’ve said to watch for a reaction.

For now I think the best thing to do is wait to see what the market has done by the time Monday’s market commentary has been released.

 

AUD/USD – Moving Back Into Daily Supply Zone

The drop out of the daily supply zone which was pushing the market down towards the current low failed to break through the low last night. Instead just like we’ve seen over the past couple of days the market reversed and started to move higher again right before the low was broken. The difference with the move higher seen today is that it’s pushed the market above the highs made yesterday and Wednesday and it’s done so in quite a strong fashion, which suggests we might be seeing the beginning of a move higher back above the current high take place.

If this current bullish candle stays as it is now and doesn’t turn into a pin bar or any other candle with a large wick, I think we have a good chance of seeing the move up continue and break through the current high at 0.76955. If this happens the buy zone I’ve marked around the current low is the point you need to begin watching for entries long, as it will become the most recent point where the bank traders have got a large number of their buy trades placed.

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