Market Commentary 22/09/16

EUR/USD – FOMC Causes Large Move Higher

Last night the FOMC was released and as expected it caused the market to move higher out of the buy zone the market had dropped into earlier that day.

aviary-photo_131190276966063883Two hours before the FOMC was released the market made a strong move out of the buy zone. This move created a demand zone which the market failed to break when the FOMC came out and caused a spike lower. The reason I haven’t marked this zone is because I don’t think it would have been trade-able when the news was released, but I thought it was interesting we saw the market move up first before the FOMC came out, because typically in the hours leading up to the release of high impact news the market moves counter to the direction in which the banks want it to move when the news is actually released.

In this situation we saw the market move up and then when the FOMC came out, it moved up again after returning to the point where the previous move up that occurred two hours previous originated from. This suggests to me the banks had already got the majority of their buy trades placed by the time the FOMC was released and the spike down to the point where the up-move originated from was simply them getting any remaining buy trades placed into the market using the sell orders generated by the spike down caused by the FOMC.

Now the market is inside the daily supply zone created by the last big drop lower. I don’t think we are going to see the market reverse from this zone, I think it’s much more likely we’ll see another move up take place into the big sell zone found above as this is where four major swing highs are found that may have been created by the banks getting big sell trades placed into the market. If they have been created by the banks placing sell trades I think we’ll see the market reverse back to the downside once it’s near the prices at which the swing highs formed at, I don’t reckon we’ll see the market reach these prices tonight or tomorrow so I think it’s best to just concentrate on trying to get a long trade placed to capture the move up into the sell zone.

Watch the area I’ve marked on the image for entries long because I think the move up into the sell zone will begin when the market enters into this zone.

USD/JPY – Bounce From Daily Demand Zone

Whilst the release of the FOMC pushed EUR/USD higher, it caused the price of USD/JPY to fall into the daily demand zone.

aviary-photo_131190293297892147

The release of the FOMC didn’t have that much of an effect on the price of USD/JPY, at least not when you compare it to the effect it had on the price of AUD/USD and EUR/USD. I doubt this bounce we’re seeing now is going to continue for much longer, I reckon we’ll see the market drop deeper into the daily demand zone either tomorrow or on Monday. When it does drop into the zone watch for a bullish engulfing candle to form as that will be a strong signal the market is about to reverse back to the upside.

AUD/USD – Moving Higher Back Towards Sell Zone

The FOMC release has caused the price of AUD/USD to continue moving higher and the market is now close to entering the daily sell zone where two big previous drops have taken place.

aviary-photo_131190301488729935When the FOMC came out we can see it caused the price to spike below the low made a few hours before. I’m not 100%  sure but I think this was a stop run due to the fact it was below a swing low where traders who went long would have placed their stop-loss when they saw the market start moving up and it was also right next to the 0.75600 level which is a big round number that traders would have used to place their stop-loss at anyway.

Similar to EUR/USD I think we are going to see another move up take place into the daily sell zone you can see above the current market price.  This sell zone has been the source of two previous large drops that may have been caused by the banks placing sell trades into the market, if they are to get more sell trades placed, which I think they are, we’ll see the drop begin from somewhere inside the zone.

For now though I would watch for entries long in the zone I’ve marked on the image. I think the next move up into the sell zone will begin somewhere inside this zone so be on the lookout for bullish engulfing candles to form when the market is in the zone.

 

 

 

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