Market Commentary 17/05/17

EUR/USD – Possible Retracement Developing

EUR/USD continued to drive higher last night, but today we’ve seen the market fall slightly, due to what I think is the bank traders taking some profits off the buy trades they got placed to cause the move up to occur.

The fact that the drop was only small, suggests to me that we are going to see a larger retracement form either tonight or by the end of the week. Hopefully a larger retracement will create a new level or zone we can use to look for entries into buy trades, because at the minute, there isn’t really anything we can use, and just entering long after the market has moved such a large distance without a consolidation or retracement taking place is usually a bad idea.

For now I recommend you wait for a retracement to occur before looking for entries long.

 

USD/JPY – Demand Zone Broken By Large Drop

A large drop which began a couple of hours ago, has caused the market to break through the demand zone I marked from the up-move that took place on the 5th May. With the zone broken, it now looks like the market is going to continue falling down to daily demand zone which formed at the bottom of the up-swing which started on the 17th April.

After I published yesterday’s market commentary, a relatively large drop occurred, which pushed the market below what was then the current low for the day. This drop has created a new supply zone which we can use to look for entries short in the event of the market moving higher again. I doubt that we’re going to see the market move back up to this zone today, so for the moment I think you should watch for signs of a retracement occurring when the market drops into the new demand zone I’ve marked at the bottom of the image.

 

AUD/USD – Moving Back Towards Current High

In yesterday’s post, we saw how the market had begun to move back towards the current high which had been created when the market dropped on Monday morning. Last night that move came to an end, as the market dropped just before it had moved above the high. Despite the fact it’s dropped, over the past couple of hours we’ve seen it move higher again, and it now looks like the current move will cause the market to break above the high later on tonight.

If the market does manage to close above the high tonight, the demand zone I’ve marked above will be valid for trading, because it will be confirmed as being the most recent point where the bank traders have got a large number of buy trades placed into the market. It’s possible that they haven’t been able to get all of these buy trades placed, so they might make the market fall back into the zone, to generate sell orders to use to get the remainder of their trades placed later on in the week. If this occurs, it may provide us with an entry long, so if the market does break above the high tonight, start watching the zone for entries long.

 

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