Market Commentary 13/02/17

EUR/USD – Inside Lower Buy Zone

Last week we saw the market drop out of the daily supply zone and begin falling towards the two buy zones which had formed during the run up into the supply zone. On Friday the market was able to break through one of these buy zones and spike the outer edge of other buy zone that was found just below the one which was broken. Today the market has dropped back to this buy zone and is currently inside it as we speak.

I think there’s a high chance we’ll see this buy zone cause a slight retracement to occur back up to the supply zone that formed just after the market dropped out of the daily supply zone. I don’t think the buy trades the bank traders placed to cause this buy zone to form are still open, so a move down through the zone is probably going to take place after a move into the supply zone has occurred.

For now I would concentrate on looking for entries short inside the supply zone seen below the daily supply zone. If the market retraces back into this zone and produces a large bearish engulfing candle, it’s a likely sign the banks are getting more sell trades placed.

 

USD/JPY – New Higher High

The upside momentum which began last week has continued today, with the market breaking above the high that was made on Friday night just before the market closed for the weekend.

The up-move which broke the high started after the market fell into the area I said to watch for a reaction in Friday’s market commentary. To be honest I wasn’t expecting the market to fall into this area on Friday night, but when it did I didn’t expect it to cause a reversal due to the fact the drop into the zone looked really bearish. The drop eventually turned into a bullish pin bar by the end of the hour and this pin is what started the move up which caused the market to break above the high today, albeit with a little help from a gap which occurred when the market re-opened last night.

I think we have a good chance of seeing this upside momentum continue throughout this week. The next point where I’d expect some down movement to occur is the sell zone found between the 114.937- 115.623 levels. When the market reaches this zone I think we’ll see a reasonably large drop take place into a buy zone or demand zone we have yet to see form in the market. In the meantime I suggest you watch for entries long inside the zone I said to monitor for a reaction, as this zone marks the most recent point where the bank traders have got buy trades placed into the market.

 

AUD/USD – Small Drop Out Of Daily Supply Zone

Today we have see AUD/USD drop out of the daily supply zone it moved back into on Friday night. The size of the move into the zone made it seem like we we’re going to see the market continue moving up today, but instead it’s fallen and is now almost inside the buy zone created by the move up.

I don’t think it’s a good idea looking for buy trades inside this buy zone due to the fact there’s a chance the drop out of the daily supply zone could have been caused by the bank traders placing sell trades to make the market reverse. Really I want to see the current high broken before taking any trades at the zone, so for now just keep tabs on the market to see what it does tonight.

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