Market Commentary 13/01/17

EUR/USD – Falling Out Of Daily Sell Zone

My apologies for not doing yesterday’s market commentary, I wasn’t feeling to well the second half of the day so I just spent the evening resting, I managed to complete the support and resistance / supply and demand levels so hopefully you received them okay.

As far the market was concerned, yesterday it continued moving higher back up to the sell zone, after the move which broke the demand zone on Wednesday came to an end due to the reaction from the press conference Donald Trump gave about his presidency. Today we have seen the market start to fall out of the sell zone, it hasn’t quite fallen out of it just yet, but the market has managed to break the low made this morning which could be a sign further down movement is going to take place.

In my opinion, if we see the market continue to fall down to the point where I’ve marked the red line, it’s a good sign we are going to see more down movement take place on Monday, and it’s likely for the market to drop to the point where the demand zone formed on Wednesday. This demand may have formed as result of the bank traders placing buy trades into the market, so monitoring the reaction it generates when the market reaches it is crucial for discovering what the banks might be up to behind the scenes.

I personally think they’ve got sell trades placed in the sell zone, but I’m not willing to act on that until we see more price action form, because at the moment the two drops we have seen occur inside the zone, could have been created by them taking profits off the buy trades they may or may not have got placed inside the buy zone and demand zone. I think for now it’s sensible to wait for more price action to form, there’s no point going short because there isn’t enough information to suggest the market is going to fall, and there’s no point going long because we don’t know if the banks have got buy trades placed in the demand zone until the market falls and reacts to the zone.

 

USD/JPY – Moving Higher From Daily Demand Zone

On Wednesday evening the reaction from the Trump press conference caused the market to fall and break through the buy zone which had caused the market to move up earlier that day. With the buy zone broken it was now likely for the market to fall down into the daily demand zone that formed at the beginning of December, which is what it ended up doing yesterday morning. In the evening a move up out of the daily demand zone began and today we have seen a continuation of this move up.

Whether this move up is the start of a reversal out of the daily demand zone or is just a retracement due to the bank taking profits off sell trades remains to be seen, but I think that if we see the market move up to supply zone seen closest to the current market price, it would be a good sign a reversal out of the daily demand zone has taken place, especially if this move up is strong and consists of multiple bullish large range candlesticks. If this is what we end up seeing, a drop down to the lows of the move up out of the daily demand zone is likely to take place, as the banks look to get more buy trades placed into the market using the sell orders generated by the drop.

On Monday look for signs of a reversal taking place when the market reaches the supply zone closest to the current market price. If the market reverses before reaching the supply, wait for a break below the lows of this move up before going short.

 

AUD/USD – Drop Out Of Daily Supply Zone

Trumps press conference on Wednesday accelerated the move up which was taking place on AUD/USD and the market yesterday climbed into the daily supply zone I suggested would cause a reverse once the market entered. Today a drop out of this supply zone has taken place but this past hour has seen the market move back into the zone in a pretty strong fashion which is an indication we might see the market break through the high of the daily supply zone before reversing.

The move up created by Trumps press conference created a demand zone which I think will cause some kind of move up to take place if the market drops and returns to it next week. The demand zone below is also likely to cause a reaction but not one as big as the demand zone above due to the number of sell orders that we’re coming into the market at the point where the lows of the demand formed.

For now I suggest waiting to see what price action forms on Monday. At the moment there just isn’t enough information available to determine if the market is likely to drop or rise next week so waiting for more price action to form is the best thing to do right now.

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