Market Commentary 12/04/17

EUR/USD – Large Bearish Candles Suggests Reversal

Today we have seen the market fall slightly after the retracement we were seeing take place yesterday stalled with the appearance of a large bearish candlestick last night. After the bearish candle formed last night the market dropped, but this morning the drop came to an end and another move higher has since taken place.

This move higher didn’t cause the market to break above the high of last nights drop due to a large bearish engulfing candle forming at the beginning of this afternoon. The fact that we have seen multiple drives higher end with the appearance of heavy selling, suggests that we could see this retracement end soon, and cause the market to fall and form a reversal structure just above the zone. If a reversal structure is going to form, we’ll see another swing higher originate from somewhere around the point where the current low has formed, possibly near the 1.05500 level, as currently that’s the closest big round number price.

For now I suggest you watch for signs of a reversal structure forming when the market reaches the current low. One of the swings in a reversal structure needs to consists of a sharp move higher, so hopefully that’s what we see when the next swing forms.

 

USD/JPY – Demand Zone Broken By Large Drop

As anticipated the demand zone the market dropped into yesterday afternoon did get broken last night, which means it now likely we’ll see more down movement take place over the coming days and possibly into the next couple of weeks, not without retracements of course.

The small up-move we’ve seen today is likely to have taken place as a result of the banks profit taking. It makes sense due to the size of the down-move which caused the market to break through the demand zone yesterday. A big drop like that would’ve caused the sell trades placed by the bank traders to go into a large amount of profit, it’s only right that they’d want to take some of that profit off their trades to use to get more trades placed later on, which is what I think they’re going to do on the next big retracement we see take place.

For entries short I think you should watch for signs of a reversal inside the little zone I’ve marked just above the current market price. Although this isn’t a supply zone, it is a place where I think we could see the market reverse, due to it being near the big round number, and being the point where a lot of the traders who went short at the end of the big drop will probably close their losing sell trades at a loss, thus giving the bank traders the buy orders then need to get more sell trades placed.

 

AUD/USD – Consolidating Around Current Low

Yesterday we saw the market rise back into the daily demand zone it had broken through back on Monday. A sharp drop out of the zone took place in the afternoon and pushed the market down to the current lows. It seemed like this drop was going to continue, but shortly after it took place a small move higher occurred and caused the market to move back into the broken demand zone.

The market has now moved back out of the zone again, but not in a sharp way like we saw yesterday, which suggests that we’re going to see the market continue to consolidation in an around the daily demand zone for the rest of the night. The supply zone which I marked out in yesterday’s post, did cause the market to reverse,but it was not a zone which I would’ve traded due to the market not moving through the current low first, as that would’ve gone some way in to confirming the zone had formed as a result of the bank traders placing sell trades.

As far as trade are concerned I can’t really suggest anything for the minute. The supply zone is still valid for trading if the market breaks down through the current low, but I don’t think we’ll see that happen tonight, not unless some high impact economic news gets released.

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