Market Commentary 25/07/16

EUR/USD – Retracement  Back Up To Supply Zone

After making a new lower low when the market opened last night EUR/USD is beginning to retrace back up towards the supply zone that formed on Friday.

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We can see how the market made a new low in the early hours of this morning and then began moving higher. When the London session started the price dropped again before making a relatively strong move higher towards the supply zone that formed last week.

The supply zone is still the main place we need to be looking for entries short as I think it’s likely for this down-move to continue below the low that was made after the drop caused by Britain’s exit from the EU.


USD/JPY – Current Low Still Intact

The low made when the market dropped last week is currently still intact and it’s looking more and more likely for the market to rise up into the supply zone caused by the previous drop.

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A large bullish candle appeared early this morning and pushed the price up but since then selling has come into the market and pushed the price lower to where it is now. I don’t think this move lower will continue as we haven’t really seen any bearish large range candles come into the market and cause the price to fall by a large amount. If the market begins to move back up watch the supply zone for a bearish engulfing candle to form.

We know this zone has a high chance of forming due to the banks placing sell trades, if this is the case they will not want the market to break above the high which means if a bearish engulfing forms inside the zone, it’s a good indication the banks are entering the market and placing more sell trades.


AUD/USD – Price Falling Towards Demand Zone

The market is now falling back into the old demand zone which I marked in Friday’s post after suffering a small retracement higher.

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The drop which is causing the market to fall back towards the demand zone has itself created a small supply zone which we might be able to use to get a short trade placed in the event of the market rising higher. The demand zone needs to be monitored closely due to the fact it formed because of the banks placing a large amount of buy trades into the market.

Although there have been other demand zones which the market has encountered during this down-move this demand formed because of the banks placing a substantially bigger amount of buy trades therefore it has a better chance of causing the market to reverse than the previous demand zones.