Market Commentary 23/08/16

EUR/USD – Reacting To Zone Drawn In Last Post

In yesterdays post I drew a zone around the highs of the drop which took place after the market opened on Sunday night and said to watch for a bearish engulfing candle to appear inside the zone before going short.

Aviary Photo_131164416286384291Today we can see the market has entered the zone and is now beginning to drop out of it. I wouldn’t necessarily call this a complete reversal just yet, personally I would want to see some kind of large drop take place from the market’s current location as this would go some way into confirming that the banks have got more of their sell trades placed into the market.

If the market does end up dropping from where it is now an area should be marked around the highs because if the banks still have more sell trades left which they need to get placed they’ll make sure there placed in close proximity to where their other sell trades have been placed which is the high of this current fall lower.

USD/JPY – Demand Zone Broken By Bearish Engulfing Candle

The demand zone which the market had just entered at the time I published yesterday’s post has been broken today by another move lower.

Aviary Photo_131164418476330498From the image we can see the market spent a few hours consolidating once it had hit the demand zone. This consolidation was eventually taken south by a bearish engulfing candle but since then we have not seen much more movement enter the market. It’s still my belief that we’ll see the market move up from these lows and form some kind of larger retracement and that the swing lows we have seen form so far have formed because the bank traders are getting buy trades placed in anticipation of a big retracement higher.

Overall the focus is still on whether the market is able to break through the area I’ve marked around the lows or if we see a sharp move higher take place either from the markets current position or when it drops into the area marked at the lows.

AUD/USD – Continued Move Higher, Reversal Looking Likely

AUD/USD has continued to retrace but this retracement is probably now coming to an end with the appearance of a bearish engulfing candle this past hour

Aviary Photo_131164419647928716Notice how several candles seen previous to this engulf had wicks on them ? these wicks are likely to be from the bank traders placing their sell trades into the market ready for when the retracement ends. With the appearance of the engulf I now think it’s unlikely for the market to come back to the supply zone marked in the image.

Hopefully the drop created by this bearish engulf will be big enough for a new supply zone to form and we can begin looking for an entry short if the market ends up returning to this zone.



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