Market Commentary 17/08/16

EUR/USD – Consolidating After Yesterday’s Move Higher

The price of EUR/USD has started to consolidate after the move higher we saw take place yesterday afternoon.

Aviary Photo_131159226966871118Currently the price is trapped between yesterday’s high and low, I think these will be important in determining if the price is going to break to the upside or downside.

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Looking at Oanda’s order-book we can see there are sell stops located below yesterday’s low and buy stops found above yesterday’s high.In addition to this there are also some buy stops found just above today’s high, a run into these may occur so the banks can make the price fall back into the sell stops found below the low, at this point the banks might come into the market and get buy trades placed using the sell orders which have been executed by the market hitting these stops.

Overall it seems quite difficult to determine which way the market is more likely to break, personally I think another move to the upside is going to take place after some kind of small move to the downside has occurred. For now wait to see which set of stops get hit then watch to see what price action forms.

USD/JPY – Price Falling After Hitting Supply Zone

Earlier today the market spiked up towards the supply zone which caused yesterday’s drop to occur and is now in the process of falling again.

Aviary Photo_131159231487544665The question now is whether the market is able to continue falling back to yesterday’s lows. There is a small demand zone which the price is currently in that may cause a move higher to take place. If it does it would suggest the banks are either placing buy trades because they expect a reversal to occur or are taking profits off their sell trades placed earlier on in the downtrend. It does seem to me like the reason why we have seen the market bounce back up to the supply zone is because the banks were taking more profits off their sell trades which they were unable to take when the price fell due to Britain’s exit from the EU.

I say this because of the fact today’s bounce started when the market came to being within close proximity of breaking the low made by Britain’s exit from the EU. The low was made when the banks took profits off their trades using all the sell orders that were coming into the market from traders selling due to the drop.

As far as levels are concerned I would watch the supply zone created by today’s’ move lower for an entry short. If the current drop has been caused by the banks placing more sell trades they will not want the market to break a large distance past the high of the zone which means seeing a bearish engulf form inside the zone is a strong sign they are getting more sell trades placed.

AUD/USD – Buy Zone Broken By Big Move Lower

The buy zone which caused the previous move higher to take place has now been broken by the drop which began when the market entered the sell zone yesterday afternoon.

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When I published my last post it seemed as though another move higher was on the cards as we had just seen a bullish engulfing candle appear when the price was close to the buy zone. It turned out the engulf was only able to cause the market to continue moving higher for the next couple of candles before the price started to really drop lower. I think we’ll now continue to see more downside over the coming days, the supply zone I’ve marked in the image is a place you want to be looking for short trade int he event of the price coming back to it although I do feel this is unlikely considering the size of the drop we have seen take place today.

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1 comment

  1. Marcel van de Kerkhof

    Assuming the banks regulate the market…if I am correct… actually the banks rarely have losing trades.

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