Market Commentary 12/10/16

EUR/USD Daily Supply Zone Broken

The daily supply zone which the market fell into yesterday has been broken today by another move lower, now the market is close to entering the daily buy zone where I believe a large move higher is going to originated from in the next few days.

aviary-photo_131207558340448057No signals to go long appeared when the market was inside the daily demand zone so it’s unlikely you would have lost any money trading the zone. At the moment we are seeing the market react to the little supply zone ( not marked ) which formed from a drop that took place this morning, I think this tiny supply will cause the market to fall into the daily buy zone but I don’t think it’s worth placing any sell trades as the distance into the zone is really small so the risk reward ratio isn’t favorable.

There isn’t really much for us to do until the market has fallen into the daily buy zone so for now just wait to see if the market falls into the zone tonight or tomorrow.

USD/JPY – Back Inside Daily Supply Zone

USD/JPY has now moved back inside the daily supply zone we saw it falling out of yesterday afternoon.

aviary-photo_131207566822982581It does seem like this current move higher is going to break through the highs created by the two drops we have seen out of the daily supply zone. I’m still not sure if we are going to see the market continue moving higher though because of the fact EUR/USD is entering the daily buy zone where I suspect a large move higher is going to begin from.  If EUR/USD starts to move higher out of this zone it’s likely USD/JPY will move lower down to the point where this up-swing on the daily chart originated from. When it reaches this point I think the next phase in the EUR/USD downtrend will begin and we’ll see the price of EUR/USD start to fall and USD/JPY start to rise and reverse from its current downtrend.

Of course none of this is set in stone and there’s a high probability the market structure will have changed by then but overall this is what I believe we are going to see happen over the coming weeks. For now just keep an eye out for signals to go short above the swing highs created by the previous two drops out of the zone.

AUD/USD – Sharp Move Higher Creates Potential Demand Zone

Today we have seen AUD/USD make a sharp move higher which I think could possibly be the beginning of a reversal which has yet to take place.

aviary-photo_131207580458791114If EUR/USD falls into the daily buy zone and begins to rise and USD/JPY begins to fall out of the daily supply zone, I think AUD/USD will start moving higher back towards the daily sell zone which caused this swing lower to take place. The sharp move up we have seen today might be from the banks placing buy trades in order to capture the up-swing back to the high of this downswing, if this is the case the area I’ve marked as a potential demand zone is the point where you want to be looking for entries long because if the banks have any more buy trades left to get placed before this upswing occurs, they’ll place them either inside the area or somewhere close to it.


  1. Iggy

    Hi, do you consider this structure as short signal, I mean to go short USDJPY when price revisit bearish engulfing on H1 made at 2:00 GMT?

    appreciate your comments

    • ForexMentorOnline

      Sorry Iggy but I don’t think it will let you post screenshots in the comment section. As far as USD/JPY is concerned I would watch for an entry short in the supply zone created by the large bearish engulf which appeared on the 1 hour chart last night. I’ll talk about it more in today’s market commentary.