Market Commentary05/08/16

 EUR/USD – Large Move Lower After NFP

Two hours ago the NFP was released and the price of EUR/USD has dropped dramatically due to the numbers being positive for USD.

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We can see how the market ran into the buy stops an hour before the NFP was released, if you go and check the open orders graph on Oanda you’ll see how the buy stops that were located above the high increased as the price moved up last night and then suddenly decreased when the market hit them a few hours ago.

The drop has caused the market to fall into the banks buy zone which I marked a few days ago. I don’t think this zone is going to make the market begin moving higher as the drop into it is too strong, I think the drop will eventually continue down towards the current low seen at the bottom left corner of the image, this means we should begin looking for places to get short trades placed.

As it stands no obvious places have formed but if the market manages to retrace and proceed to drop, the drop may form a supply zone or breakout zone we can use to await signals to get short.

USD/JPY – Moving Higher After NFP

Whereas EUR/USD and AUD/USD have both been dropping since the release of the NFP the price of USD/JPY has started to rise.

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The sell zone is our next point of focus as it’s the last place we know of where the banks came into the market and placed a large amount of sell trades. A break through this zone would signal a retracement is in play and we should start looking to get long trades placed.

Today’s move higher has also created a demand zone that we might able to use to enter a long trade if the market is able to return to it next week.

AUD/USD – Possible Reversal After NFP

AUD/USD may be reversing from its current up-trend due to the fall we have seen because of the NFP release.

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If you compare today’s drop with the drops we have seen take place previously you can see today’s fall looks to be much stronger. On the other drops there was a fair bit of buying taking place during the time the market was falling, with this one we have only just started to see buying enter the market and this buying is likely to be from the banks taking profits off the sell trades that have caused the drop to take place.

Your main focus now should be on the supply zone seen at the top of this drop lower. If this is in fact the beginning of a reversal the banks will still have sell trades left which they need to get placed before the market fully reverses. This means a run up into the supply zone is likely because when the banks are getting trades placed to make the market reverse they will always get their trades placed at similar prices meaning their next sell trade is going to be placed very close to where the sell trade that has caused this drop has been placed.

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