Market Commentary 14/10/16

EUR/USD – More Sell Stops Building Under Swing Low

Yesterday we saw how some sells stops had built up below the swing low which formed from the market rising out of the daily buy zone. Today we have seen the market fall back into the zone and we now have sell stops building up from the 1.09750 levels to the 1.10000 level.


Again if we look at Oanda’s order graph we can see the spike in sell orders between the 1.0950 level and the 1.1000 level, the highest concentration of sell stops is around the point where the 1.09750 level is, and then there is a another accumulation of sell stops just above that close to the 1.10000 level.


In the image above I’ve marked the area where the sell stops are with black lines, I think the two swing lows marked with X’s are the two main points at which the majority of the sell stops have been placed due to the fact traders always tend put their stop-loss above the most recent swing high or swing low that’s formed in the market. I still think another move down is going to take place before we see the market reverse but I don’t think that will happen tonight, so for now just wait to see what the market does over the next few hours.

USD/JPY – Inside Supply Zone Created By Yesterday’s Drop

As expected USD/JPY moved up from the demand zone it fell into yesterday afternoon and it’s now back inside the supply zone created by the drop.


We have seen repeated attempts by the market to drop out of this zone in the form of bullish pin bars which were originally bearish engulfs but so far none of these attempt’s have succeeded . The reason I think they’ve failed is because a some buy stops have accumulated around the spike into the zone which took place earlier today.


If you look at order graph you can see a large number of buy stops have accumulated just below the 104.50 level, that’s basically the high of the candle I marked with an X in the previous image. Similar to EUR/USD I think  a move into these buy stops is going to take place before we see the market fall out of the supply zone, it would make sense too from the banks perspective because it would allow them to get more of their sell trades placed into the market. Another thing which you can see if you go on to the order-graph yourself is how the candle which I marked with an X actually formed because of a stop run that took place earlier today.

If we see a move into the sell stops over the next few hours watch for a bearish engulf to form before going short. You can also use a bearish pin bar as your entry so long as the pin is quite large and you’re sure it has spiked through the buy stops. Whatever your entry may be make sure you put your stop above the high of the supply zone.

AUD/USD – Large Move Higher Into Sell Zone

No move back into the demand zone occurred after yesterday’s market commentary was published, instead the market continued to move higher and in the past few hours we have seen it enter and all out of the sell zone which formed back on the 5th October.

aviary-photo_131209319179868247I don’t think this move out of the sell zone is going to continue for much longer, I think the market will drop into the demand zone I’ve marked closest to the current market price and then start moving higher through the sell zone and back towards the daily sell zone found at the 0.79.000 level. Once it reaches the daily sell zone I think another large move lower will take place that will causes the market to drop into the buy zone at the 74.500 level. For now I would watch for entries long inside the demand zone I’ve drawn on the image which contains two demand zones within. If you see a bullish engulf form inside this zone I think you’ll be able to ride the move up back into the daily sell zone.

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  1. Glyn

    Hi, just found and am loving your website.

    question: last weeks flash crash made me very nervous about holding overnight or over the weekend. however i’m short eurjpy and usdjpy and would love to hold them – do you think it’s wise to close all out for the weekend?

    • ForexMentorOnline

      I think you’ll be fine holding them over this weekend, be careful over the next few weeks though because I really feel like we’re going to see USD/JPY and EUR/JPY reverse soon. Where are you short from if you don’t mid me asking ?

  2. Sufian

    do you incoporate fundamentals to support your decision to make a trade i.e some news supports the aussie dollar hence it confluences to LONG AUDJPY when price reaches demand zone? just an example

    • ForexMentorOnline

      I don’t use any fundamentals in my trading Suffian, of course I always keep track of the big news announcements like the NFP,FOMC etc but I dont actually do any fundamental analysis on the market.

  3. Glyn

    i shorted usdjpy at 104.33 and ej at 115.00 – i did actually close both before close of play on Friday

    My ej entry was from an identified 15 min zone shown here

    usdjpy was just a play on a possible double top.

    By the way, I dont really agree that bases within a rally / drop are weak at all – providing they are recent they are great to trade – i call them speedbumps – I like to see around 3-5 candles in a speedbump followed by a retrace back to them. they seem to work very well on all lower timeframes from 4hr down