Market Commentary 20/07/16

EUR/USD – Stop Run On 1 Hour Chart

This past hour has seen a stop run take place above the highs of the drop which occurred this morning.

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When the London session opened this morning a big drop took place, this drop would have caused many retail traders to enter short trades as they will have believed the market is going to continue to fall. It’s probable the bank traders have used all the sell orders this down-move would have generated to take profits off their own sell trades placed earlier on in this move down.

What we need to look out for now is if the current low ends up being broken or if the market starts moving back towards the high made when the stop run took place. A break above here would signal more upside probably back towards the highs of the drop that occurred yesterday.


USD/JPY – Price Extremely Close To Breaking The Daily Demand Zone

USD/JPY has continued climbing towards the high of the daily supply zone and it’s possible we’ll see a break sometime tonight.

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We can see that for most of today the market has moved higher and higher and has broken the highs which were made yesterday afternoon. Now the market has literally just spiked the high of the daily supply zone and we are beginning to see a small reaction take place. In order for a reversal to be setting up ideally I would want to see a sharp move down with multiple bearish large range candles, a move down like this will likely create a supply zone that we can use to get a potential entry short.

Until that happens there’s no point in us trying to anticipate when a reversal is going to take place so we must await further price action.


AUD/USD – New Low, Small Retracement Higher

AUD/USD has managed to break through the swing lows discussed in my last post, it’s still too early to tell if this is a break which signals a continuation lower or a break that the bank traders have created in order to get more buy trades placed.

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When the low was broken there was an immediate reaction in the form of a bullish engulfing candle. This engulf has pushed the market up slightly and could cause a continued move higher if the highs of the last drop lower are broken. If we see the market fall again and close below the lows made when the engulf formed then it’s likely for the market to start moving to the downside.

For now keep an eye on the supply zone found closest to the current price. We might see a run up into the here so the banks can get more buy orders to use to place additional sell trades into the market. If this is the case watch for a large bearish engulfing candle before placing any short trades.


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