Market Commentary 27/02/17

EUR/USD – Moving Back Into Sell Zone

This afternoon we have seen the market move back up towards the sell zone which formed fr0m a sharp drop that took place last Friday. No move lower continued when the market opened last and the move up into the zone has so far been quite strong, with two reasonably large bullish candlesticks forming this morning and this afternoon.

This past hour we have seen the market spike into the sell zone and produce a bearish pin bar. From the way things are currently looking I don’t think this pin is going to cause the market to drop through the current low. I believe we are going to see either a deeper move into the sell zone take place or the market is going to completely break through the sell zone and move up into the supply zone seen above. I think if the market does begin moving up from where it is now we’ll see the sell zone broken, because if the drop which created the sell zone last Friday had actually been caused by the bank traders placing sell trades, the downswing it would’ve created would be a bit bigger than what we’ve seen form.

For now I would watch for entries short in the supply zone at the top of the image. If this supply zone has been created by the banks traders placing sell trades there’s a high chance we’ll see the market drop once it’s reached, because the size of the sell trades they could have got placed here are much bigger than what they could have placed at the sell zone the market is reacting to now.

 

USD/JPY – Small Retracement Being Engulfed

With the buy zone being broken last Friday it looked likely the demand zone found below would be broken today, and whilst the demand hasn’t been broken just yet, a large bearish engulfing candle forming now could be the start of the move down which causes the demand zone to break.

This bearish engulf has formed after a small retracement began once the market opened last night. I think if the engulf does cause the market to break through the demand zone we’ll see some kind of bigger retracement take place a short time later. This retracement may push the market up to a supply zone or sell zone which has yet to be created, but for now the focus is still on watching for entries short in the supply zone marked on the image.

 

AUD/USD – Failing To Move Higher Out Of Sell Zone

Last Friday we saw the market drop back into the buy zone which had formed after the market had made a big push deeper into the daily supply zone on Thursday afternoon. Today a move higher out of this zone has taken place but it failed to cause any significant up-movement to occur which suggests we are going to see more downside take place over the coming days.

You can see the move up which began right after the market opened last night terminated early this morning with a candlestick forming which had a really large wick. This candle along with its wick may have formed as a result of the bank traders getting more sell trades placed to make the market reverse. It’s still too early to confirm whether it is or not but I think that if a move down through the buy zone low takes place it will be a good sign that it has. For now I still think it’s a good idea to keep an eye out for entries short in the supply zone.

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