Market Commentary 16/02/17

EUR/USD – Inside 1 Hour Supply Zone

Yesterday’s we saw the market break through the buy zone and start producing some bullish price action. Today this bullish price action has continued, and has actually pushed the market into the supply zone I said to watch for entries short in yesterday’s market commentary. So far we haven’t had any signals to suggest that this supply zone is going to cause the market to reverse, and with things being the way they are now it’s looking likely that we might end up seeing the market break through this zone and move up into the other zone found above.

There is a slight chance that we could be seeing the beginning of a reversal to the upside take place with this move up. It’s far to early to say whether it is or not but if we see a move into the daily supply zone occur followed by a weak move out of the zone consisting of small bearish candles, I think that would be a good sign that we are probably going to see more up-movement take place.

For now I suggest you continue watching for entries short inside the supply zone the market is in now and the supply zone that’s found above. At the moment we are seeing a bearish pin bar form but I’d wait for a large bearish engulfing candle to appear before going short as the pin could have just formed as a result of the bank traders taking profits off buy trades.

 

USD/JPY – Falling Into Buy Zone

The drop out of the sell zone we were just beginning to see take place yesterday has continued today, with the market managing to fall back into the buy zone where I said to watch for entries long just this past hour. So far the market has only managed to reach the outer edge of the buy zone, but I think that if things continue as they currently are we’ll see a deeper drop into the zone take place over the next few hours.

If we do see the market drop deeper into the buy zone be on the lookout for entries long, as I think this buy zone has a good chance of causing the market to reverse and move back up towards the sell zone. Similar to EUR/USD there is a chance we could see USD/JPY reverse to the downside if EUR/USD reverses to the upside due to the fact both currencies are correlated with one another. If a reversal to the downside is going to take place on USD/JPY, we’ll probably see another swing down develop somewhere near the point where the drop out of the sell zone began from yesterday, so if you do manage to get a buy trade placed and the market does move up to the sell zone, make sure to take some profits off your trade just in case a swing down does develop.

 

AUD/USD – New Higher High

Today the market has broken above the sell zone it was reacting to when yesterday’s marked commentary was published and made a new higher high. I’m not sure yet if this new high is actually a high that is signalling more upside, or if it’s just a breakout trap created by the bank traders to lure traders into placing buy trades which they can use to get more sell trades placed to cause the market to reverse.

I think if we see a large down-move occur over the next few hours it will be a good sign the new higher high is a breakout trap created by the banks, and that we are going to see more down movement take place tomorrow. The source of the drop which creates this down-move should be marked by you as a supply zone, because if the banks have any more sell trades left to place into the market, a move into the zone could take place either tonight or tomorrow, so be on the lookout for a down-move to occur over the next few hours.

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