Market Commentary 17/10/16

EUR/USD – Rising Out Of  Daily Buy Zone

Last Friday we saw how a collection of sell stops had built up around the 1.10000 level and the 1.09744 level. In the hours leading up to the market close, the price fell into these stops but no up-move took place which could have caused you to think the banks didn’t use the sell stops to get any of their trades placed. Today we have seen the market move higher out of daily buy zone but I still think another move down is going to take place before we see a reversal.

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You can see I’ve marked the two prices at which the majority of the sell stops were placed last week. If you check Oanda’s order graph you’ll notice that some sell stops have now built up below the low of today’s move higher. I think we are going to see the market move into the sell zone seen on the image and then fall back to the low of today’s move higher. By the time this has happened more sell stops are likely to have built up below the low because a lot of traders will have entered buy trades under the impression that today’s move higher is in fact a reversal. If the banks make the market fall and spike through the low, they will they be able to get a large number of their buy trades placed into the market using the sell stop orders that will be executed by the low being breached and also they will have additional sell orders coming into the market from people who are just placing sell trades because they think the price is going to continue t0 fall.

For the next couple of day’s just monitor the market to see if it moves up into the sell zone. If it does, and the market starts to fall, watch for an entry long around the low of this current move higher where I’ve marked the box showing the sell stops. Lookout for a bullish engulfing candle to form before going long as that will be the main sign the banks have entered the market. If we don’t see the market rise into the sell zone, still be on the lookout for watch an entry long around the area I’ve marked with sell stops.

 

USD/JPY – Slight Drop Out Of Sell Zone, Buy Stops Still Around 104.50 Level

After last Friday’s market commentary was published, USD/JPY finally fell out of the sell zone it had attempted to fall out of multiple times during the day. Since then we haven’t seen a continuation of this down movement but the buy stops which had built up around the 104.50 level during the day have remained which may mean another move higher into these stops might still take place before we see the market reverse.

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Looking at the chart you can see the slight drop out of the zone took place literally right after Fridays market commentary was published, a move higher back into the sell zone then took place before the market spent the remainder of night consolidating until the close. I think the focus is still on looking for signs of a reversal taking place when the market moves up above the buy stops, if a large bearish engulfing candle forms when the market strikes through the stops it’s a good sign the banks are entering sell trades.

 

AUD/USD – Rising After Hitting Demand Zone

Today the fall which began last Friday has continued and the market is now back to rising again after hitting the demand zone I marked last week as the point where we would likely see the up-move which is going to break through the swing high begin from.

aviary-photo_131211910170020368I don’t expect many people were able to get an entry long when the market spiked the demand zone because no signals to go long actually appeared. If you go through the time-frames you’ll see no bullish engulfing candles formed on any of the time-frames below the 1 hour chart so unless you had a pending order placed at the zone there’s probably no way you would have been able to get long in the market. I do think the move up we’re seeing now is going to cause the market to break through the sell zone, once this takes place it’s likely the market will rise up to the daily sell zone seen above the 0.77000 level.

At the moment there doesn’t seem to be any area’s we can use to get long trades placed, so I think for now the best thing is to wait until more market structure has formed to see if any new area’s are created.

 

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