Market Commentary 31/10/16

EUR/USD -Falling Out Of Daily Supply

Last Friday a large move higher took place that caused EUR/USD to move into the daily supply zone created by the drop which occurred back on the 19th. Today we have seen the market fall out of the zone, but it’s my belief this drop is going to come to an end soon and the market will make another run into the daily supply zone.

aviary-photo_131224007501893158The reason the market made such a sudden move higher late Friday afternoon, was because the FBI came out and announced it was reopening its investigation into Hilary Clinton’s emails. I’m not really sure why that’s significant for the markets, but it seemed to have a negative effect 0verall on the Dollar as USD/JPY suffered a large drop when the news was released. I don’t really think the large move higher changes the long-term outlook of the market. I still believe we’ll see the market reverse when it moves deeper into the daily supply zone, if it doesn’t the other daily supply zone which formed when he market dropped on the 8th October will become out next focus point for a reversal as that is the source of this entire move down.

As far as entries are concerned , I would watch the 1 hour supply zone seen inside the daily supply zone for an entry into a short trade. The demand zone just below the current market price is a point you can use to look for an entry long but make sure you keep your profit target low as there’s a high chance the market could reverse out of the daily supply zone before hitting the 1 hour supply seen within.

 

USD/JPY – Sharp Drop Due To Clinton Emails

The FBI announcing it was reopening their investigation into Hilary Clinton’s emails caused a sharp drop to take place on USD/JPY.

aviary-photo_131224020938529504This drop was very similar to the drop we saw on the 25th October, only this one was a bit sharper and caused the market to fall a greater distance. The size of this drop does lead me to think that maybe the market is reversing, but I can’t be sure of that based off the fact I still feel like the market is going to move into the daily supply zone seen at the 106.000 level before reversing and making a large move lower. I think the best course of action at the moment is to let the market tell us what it wants to do. If it breaks through the supply zone then it’s probably going to move into the daily supply zone found above, if it enters the supply zone and starts producing signals which suggests a reversal is going to take place, a short trade should be considered, either scenario is just as likely at the minute.

 

AUD/USD – Small Retracement Caused By Supply Zone

Today we have seen the market retrace after hitting the supply zone that formed during the move down we saw at the beginning of the week.

aviary-photo_131224039027908403I did think this supply was going to cause the market to move lower but the bullish engulf which formed an hour ago seems to suggests that another move higher may take place before we see that happen. At the moment the outlook is still one of more impending downside, I don’t think another move higher will last long or move a large distance past the supply zone causing the current retracement to take place.

Tonight just monitor the price action to see if any signs of a reversal appear around the upper half of the supply zone.

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