Market Commentary 12/08/16

EUR/USD – Sharp Move Higher Due To USD News

A couple of hours ago several pieces of high impact USD news was released which has caused the price of EUR/USD to sharply rise above yesterdays highs.

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Currently we can see some big bearish candles pushing the market back towards the source of the move higher. These candles have been created either by the bank traders placing sell trades to make the market reverse or by them taking profits off buy trades which they may or may not have placed at the swing lows. If this drop is able to break through the demand zone drawn from the sharp move higher it’s likely because the drop has been created by the bank traders placing sell trades to make the market reverse.

If you look at where today’s high terminates you can see it falls in-line with the high created when the price fell on the 3rd August, this could be because the bank traders are getting sell trades placed into the market.  The high made on the 3rd might be where they placed their first batch of sell trades and then the high made today and yesterday could be their second and third batch respectively. Like I said a minute ago a break below the demand zone would add a lot of weight to this theory as the demand zone is the most recent point where the banks could have placed buy trades into the market. A break below here would tell us the banks buy trades have been closed which means they have no reason to come into the market and place more buy trades.

 

USD/JPY – Big Move Lower Suggests Further Downside

The USD news turned out to be negative for the price of USD/JPY and as a result we have seen a large drop take place.

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In my last post I said how a “big move higher consisting of multiple bullish large range candles” would create a demand zone we can use to get a long trade placed. Whilst this big move higher did in fact take place soon after yesterday’s post was published today’s drop was able to easily break through the demand zone.

Today’s drop means I’m pretty sure the market is going to continue to fall below the lows of this whole consolidation which has been in place since the 2nd of August. The high of today’s drop terminates close to the point where two other big drops have taken place, this suggests all three drops have been caused by the bank traders placing sell trades in anticipation of a move lower which we might be seeing the beginning of right now.

 

AUD/USD – Confusing Price Action

Yesterday we saw the market fall and it looked as though the market was reversing due in no part to the fact that we had two swing highs form at very similar prices.

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Today the USD news has caused the price to rise but I’m not sure if this up-move signals the end of the reversal or is simply another part of it. All of the swing highs are close together but I’m not sure if the current high made by the move up has formed because of the bank traders taking profits or placing sell trades. I guess the focus now is on wheather the market is able to now break through the buy zone as this is the last major place where the banks got buy trades placed.

 

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