Market Commentary 29/09/16

EUR/USD – Moving Back Into Supply Zone

Early this morning EUR/USD rose into the supply zone that formed from yesterday’s drop, after initially falling out of the zone the market is currently rising back into it and I think we may see the zone get breached in the next few hours.

aviary-photo_131196324474759095Weather this zone holds or not kind of depends on how bullish the market looks by the end of the hour. If the 1 hour candle stays as it is now, I think there’s a high probability we’ll see the market break through the supply zone and move into the other supply zone found above. If by the end of the hour we have seen selling enter the market and the 1 hour candle has gone from being really bullish to having some kind of wick on it, then I think it’s possible the supply zone could hold and the market may end up falling lower.

Personally I’m not sure which scenario is more likely to take place so I think the best thing to do for now is just wait to see what has happened by the end of the hour.

USD/JPY – Large Move Higher Signals Possible Reversal

Last night we saw the market make a large move higher out of the buy zone which has been acting as a price base for the past few days.

aviary-photo_131196333938573976I think this move higher confirms the market has reversed and I now believe that it’s possible we’ll see the market move back up to the daily supply zone found at the 103.500 level. I do expect that we’ll see some down movement take place when the market reaches the supply zone as this supply was one of the swing highs the bank could have placed a large number of their sell trades at. I don’t reckon it will cause the market to fully reverse but I think it will definitely cause some kind of retracement to take place.

For entries long I would monitor the area I’ve marked on the image. Area’s like this typically tend to act as bases for when retracements are taking place, usually you’ll see the next move higher originate from an area like this so be on the lookout for bullish engulfing candles to form if the market falls into the zone.

AUD/USD – New High, Reversal Potentially In Progress

In yesterday’s post I said we might be seeing the market reverse and that the high which formed back on Tuesday would remain the high for the entire duration of the reversal. Well today we have seen Tuesday’s high get broken by a move higher which began yesterday evening, but since the new high has been made the market has fallen again and I now think the market is getting ready to reverse back down to the buy zone on the daily chart.

aviary-photo_131196346458666559The reason I think the reversal is now going to take place is because the drop from today’s high was much sharper than the drop that took place from the swing high made on Tuesday. Usually if the market is going to reverse it will do so after a sharp rise or drop has occurred in the market, yesterday’s drop wasn’t really sharp due to the fact a lot of buying was still coming into the market when the price dropped, despite this I still felt like a reversal could take place because of the two swing highs which had formed at that point.

Also with the addition of the swing high we have seen form today there are now three swing highs in the market that are found reasonably close to one another, if the banks have any more sell trades left to place before the market reverses they’ll place them near to where their other trades have been placed, which is the three swing highs we have seen form so far during this reversal.

For entries short I would watch the supply zone created by today’s drop, if you see a bearish engulfing candle form when the market is inside this zone it’s a good sign the banks are getting more sell trades placed and it could signal the beginning of the reversal.

 

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