Market Commentary 27/07/16

EUR/USD – Small Retracement Higher

EUR/USD is currently in a small retracement after the down-move we saw from the supply zone yesterday came to an end.

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You can see how the retracement has managed to move a small distance into the down-move, this past hour has seen a large bearish engulf push the market into the lows that had been made earlier today. This bearish engulf probably signals the start of the next move down that will push the market into the current low I’ve marked in the image.

As far as trades are concerned I would still watch the supply zone where the market fell from yesterday. A move back into here is still possible and may occur before the next down-move gets underway. As always wait for a bearish engulf to form before entering short.


USD/JPY – Large Retracement Higher

After suffering a big drop lower yesterday it was inevitable that we would see some kind of retracement take place as the banks took profits off their trades. What we didn’t expect was the retracement would push the price all the way back up to the point where the banks placed their sell trades.

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I’ve marked the point where the banks placed the sell trades which caused the drop lower with X’s on the image. If you draw an area around these points you can see how the spike that took place earlier came up into the area before falling to where it currently is now. There’s a high chance this spike was created by the bank traders placing more sell trades into the market using the buy orders that had been generated from the retracement.

If this is the case the high of the spike will not broken by a large distance in the event of the market moving higher. We do have the FOMC coming out in a few hours and it’s likely the market will see a large increase in volatility upon its release. This means we might see a spike up past the high of the spike which took place earlier, due to this I think it’s best to wait until the FOMC has come out before getting any trades placed.


AUD/USD – Large Move Higher Counteracted By Heavy Selling

Yesterday we saw a big move higher occur and cause AUD/USD to break past several swing highs it had made previously.

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It seemed as though the up-movement would continue throughout today but instead we have seen the price drop lower after making a big spike in the early hours of this morning. The spike strongly suggests the banks have placed sell trades into the market which means the X’s I marked in yesterday’s post were not caused by the banks placing buy trades and were instead created by the banks taking profits off sell trades placed earlier on in the move down.

For now we need to watch to see if the market is able to fall below the lowest low marked with the X. A break below here would probably cause the price to fall even lower past the demand zone marked at the bottom of the image.


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