Market Commentary 17/02/17

EUR/USD – Supply Zone Broken

The supply zone which the market had entered yesterday has been broken today, but the market has not been able to break it by a large distance before falling again, which suggests that a possible reversal may still take place over the coming hours.

You can see from the image how the market started to move lower soon after the supply zone was broken. This past hour we have seen a bearish engulfing candle form. Although it’s not the best engulf due to its small size it does have the potential to cause the market reverse, if it does this and we see the price start to drop in quite a strong fashion, then it would be a good sign the banks have caused the drop to form from getting more sell trades placed into the market. If the market moves up and breaks above the high of today’s drop, its a signal more upside is going to occur and the market is probably going to move into supply zone seen below the daily supply zone.

 

USD/JPY – Buy Zone Broken

The buy zone which the market had just begun to drop into when yesterday’s market commentary was published has been broken this afternoon, but like EUR/USD I don’t think the drop is a signal we are going to see more downside take place just yet due to the fact it hasn’t broken the buy zone by a large number of pips.

No decent signals to go long really formed inside the buy zone last night, so it was unlikely you would have been able to get a trade placed. Currently we are seeing some bullish price action form, but I’m not convinced that with the market looking the way it is now that this bullish price action is going to cause any significant up-movement to take place. On Monday we’ll have to see if the market can move up to being back above the buy zone, if it can do that then I think the chances of a move up to the sell zone are much higher than what they are now. If we see the market continue to fall, I think we’ll see a reaction take place at the bottom demand zone, so we’ll have to watch to see how big this reaction is to determine what it means for the near term market direction.

 

AUD/USD – Sharp Drop Creates Supply Zone

Yesterday we saw the market move above the swing highs which had been made over the past couple of weeks. This move looked like a potential breakout trap and today we have had more evidence that this is case, as a sharp move lower occurred early this morning which has pushed the market back down towards the edge of the daily supply zone.

I wouldn’t go as far to say that this is definitely a breakout trap just yet, but it certainly looks to be the case based on the price action I’ve seen form so far. Really the drop we’ve seen today needs to continue over the course of tonight and Monday for the breakout trap to be confirmed. If it doesn’t continue dropping then a move into the supply zone created by the drop is likely to occur. I suggest you watch for an entry short inside this supply zone even though the breakout trap hasn’t been confirmed yet, because if it has formed as a result of the bank traders placing sell trades then you can expect to them get more sell trades placed around this point, which would be the beginning of a reversal if one was actually going to occur in the market.

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