Market Commentary 29/03/17

EUR/USD – Large Drop Through Demand Zone

Today we have seen a large drop through the demand zone I said to watch for entries long take place. The drop began a couple of hours after yesterday’s market commentary was published, when we we’re seeing the price start to rise back up towards the high of the retracement which had formed on Monday. The fact the market has dropped such a large distance is a sign that we could be seeing the beginning of a reversal take place, although we’ll have to wait and see how the market reacts to the lower demand zone seen in the image below before confirming this to be the case.

You can see that the current price action is showing some wicks on the candles, which suggests the bank traders are beginning to take some profits off the sell trades they placed to cause the drop to occur. I think we’ll see another drop take place sometime tonight, which will push the market into the demand zone seen at the bottom of the image. If the subsequent move out of this zone is strong, and causes the market to move a large distance in a short space of time, it will be a signal that we may see the market continue to move up and break through the retracement high.

If the move out of the zone is small, and doesn’t cause the market to move up a large distance, it suggests that we will see more downside take place over the coming days, and you should begin watching for a reversal structure (i.e multiple swing highs forming at similar prices to one another) to form somewhere around the halfway point of the downswing.

 

USD/JPY – Falling Out Of Supply Zone

In yesterday’s post, I said how the current price action was suggesting a move away from the lows and into the supply zone was likely going to take place sometime soon, and today we have seen that move take place, although with the way things are looking at the moment, I think we may see another move higher occur and push the market above the supply zone later on tonight.

So far we haven’t seen a sharp drop out of the supply zone take place, which suggests that the down-move out of the zone is simply a result of the banks taking profits off their trades instead of getting trades placed to make the market reverse. If a bigger drop does end up taking place, I think we’ll see the market break through the current lows, but not after causing some kind of small retracement to occur. If the market moves back up and breaks the supply zone, it would be a signal that a move into other supply zone seen at the top of the image is probably going to take place, and you should start watching for a reversal structure to form when the market enters the zone.

 

AUD/USD – Moving Back Into Daily Supply Zone

The sharp move higher we saw take place after the market made a new lower low in yesterday’s market commentary has continued today, and has caused the market to break through the supply zone and almost move back into the daily supply zone the market fell out of last week.

Although the initial move into the supply zone was quite sharp, the continued move through the zone we have seen today has been a little more subdued, and has not caused the market to move a large distance. Whether this is just as a result of the banks taking profits off their trades or slowing momentum in the market remains to be seen. But I think that if we continue to see the market move up in this fashion, there’s a good chance we could see the market reverse at the supply zone seen inside the daily supply zone, so keep watching this zone for entries into short trades.

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