Market Commentary 19/07/16

EUR/USD – Low Broken, Price Now Falling

Last night the market broke through the supply zone that formed on Friday before consolidating and finally moving lower this afternoon.

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Although the move through the supply zone meant the market had made a new higher high, it does not signal a reversal due to the fact the high was not able to break the previous high by a large distance. When a higher high or lower low is made it does not mean the current market direction may be changing because most of the time when the banks are getting trades placed or taking profits they’ll do so close to where they have placed trades or taken profits in the recent past, which are previous swing lows and highs.

So in the above image we had the banks place sell trades at the high made when the market dropped on friday, when the market broke these highs today they placed more sell trades using the buy orders that had been generated from the move up, as evidenced by the fact the price has now fallen considerably lower.

All we need to do now is wait for a retracement to occur because at the moment there isn’t any places where we can look to get short trades placed.

 

USD/JPY – Still Drifting Towards High Of The Daily Supply Zone

USD/JPY has continued to move towards the high of the daily supply zone but as of yet it has not managed to break it.

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There was a small drop which took place early this morning but the market was able to recover and move past the high made yesterday.

For now all we can do is wait for more price action to form, there’s no point in us placing buy trades because we know the market is at a point where it’s likely to reverse, conversely placing short trades probably isn’t a good idea because there hasn’t been any signs of the market reversing.

 

AUD/USD – Important Low Broken, More Downside Likely

The down-move which began yesterday has continued today and the important low marked in my last post has now been broken which suggests more downside over the coming days.

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With the important low broken the next point of interest is the swing low found below. If you look at where I’ve drawn this swing low from you’ll see two additional lows formed soon after. All three of these lows formed close together which means it’s likely the banks placed their buy trades which caused the move up at these lows. A break below here would tell us their trades are now closed and further downside is probable.

When the market broke the important low early this morning a supply zone formed which we can use to look for a potential short trade.

Although the supply zone found above has a much better chance of causing a reversal to take place I don’t think the market is going to be able to return to the zone over the next couple of days which means the supply zone by the low might be our only chance to get a good short entry.

If the market comes back to the zone wait for a bearish engulfing candle to form before going short.

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