Market Commentary 26/01/17

EUR/USD – Reversal Taking Place

Today we have seen the market drop out of the daily supply zone it has been consolidating in for the past few days and break through the lows of the demand zone I drew in yesterday’s post. The fact the market has broken these lows by quite a large distance leads me to believe that we have seen the market reverse out the daily supply zone and it is now going to continue falling down to the demand zone marked on the bottom of the image.I think we’ll see some kind of reaction take place once the market reaches this demand zone. It might not be a big reaction but it might be enough to push the market up into a supply zone or sell zone that forms during the move down. The drop out of the daily supply zone has created a new supply zone we can use to look for short trades, but I don’t feel like the market is going to return to it now after dropping such a large distance below the lows of the demand zone.

The goal now is to wait for more supply zones to form during the move down into the bottom demand zone. Although the drop out of the daily supply zone is a signal the bank traders have got sell trades placed at the highs of the consolidation, it’s unlikely they’ve been able to get all of these sell trades placed, which means a move back up to the highs or another point that’s yet to form is likely to take place as they look to get the rest of their trades placed into the market.

 

USD/JPY – Out Of Daily Demand Zone

USD/JPY has today moved out of the daily demand zone it has been in since the beginning of the week and is now making its way back towards the sell zone which caused the last swing lower to take place.

The demand zone I said to keep an eye on for entries long is what caused this current move higher to take place after the market fell into it last night. No bullish engulfing candle appeared on the 1 hour chart when the market was inside the demand zone but these was a decent one that formed on the 15minute chart right at the beginning of today’s move higher. Don’t beat yourself up if you didn’t manage to get an entry long into this move up. It’s likely the sell zone will cause the market to fall a little back to a point where the banks have got some of their buy trades placed so we can look for another entry long when these points form in the market.

 

AUD/USD – Falling From Supply Zone

Yesterday we saw a supply zone form as a result of a sharp drop that had took place in the market. I said how the sharp drop was a possible sign we are in the process of seeing the market reverse, and today we have had further evidence that this is the case, after the market returned to the supply zone last night and proceeded to fall out of it.

The market entered the supply zone around midnight time so it would have been tough to get a sell trade placed if you live in the GMT timezone.

With the market now falling I don’t think it’ll be long before we see the price drop into the demand zone seen at the bottom of the image. In contrast with USD/JPY and EUR/USD I don’t believe we are seeing the market completely reverse on AUD/USD. I think that whatever move down now occurs will come to an end quite soon and we’ll see the price move back up again and continue moving in the direction of the swing higher the market has been in since the end of December last year.

 

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