Market Commnetary 06/07/16

EUR/USD – Market Falls After Yesterday’s Stop Run

The stop run which took place yesterday above the swing high has caused the market to reverse and the current momentum is now to the downside.

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You can see how a large bearish engulfing candle appeared after the stop run had taken place. This engulf caused a new low to form and changed the momentum to the downside, now we must see if the market is able to break the important low which I’ve marked in the image.

The reason why this low is important is because it’s one of the places where the banks have either placed long trades or took profits off short trades, if they’ve taken profit here then it’s likely for the market to break the low and continue moving lower, if they’ve placed buy trades they’ll come into the market and place more buy trades in an effort to stop the market from breaking the low.

At the moment we can’t tell which one it is so we must await further price action. On another note the past hour has seen the market run into a collection of sell stops that have built up below the swing low, this could provide us with a move higher which we need to keep an eye on for signs of a reversal.

Watch for the move higher to end with the appearance of a bearish engulfing candle which is much bigger the bullish candle it engulfs.

 

USD/JPY – Swing Low Broken, Watch For Continuation Lower

The swing low which the market was approaching yesterday was broken last night and it’s looking likely for the market to now head south towards the low of the drop caused by Britain exiting the EU.

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Since the low was broken we have seen some profit taking enter the market. This profit taking may be enough to push the price back up to the supply zone created when the market dropped below the swing low. You can see I’ve encompassed two drops in my marking of this supply zone.

The reason I’ve done this is to make sure that in the event of the price coming back up into the zone all the potential places it could turn at are covered, if I were to market the two drops as individual zones and placed a sell trade at each one I would have to pay the spread twice instead of only having to pay it once if I mark them as one zone.

Watch to see if the market is able to climb back up into the supply zones, if it does await a bearish engulfing candle before going short.

AUD/USD – Back On The Move Higher After Visiting Demand Zone

The marked has tested the demand zone which I marked as place where the market is likely to reverse in my last post and is now moving up towards the highs of the drop.

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As you can see from the image the market didn’t exactly turn when it was inside the demand zone, instead it spiked the low and then proceeded to move higher. Our focus now is the high which I’ve marked with a line. A break above here wold confirm that the move up has been caused by the bank traders placing buy trades, at the moment I’m 80% sure that this is the case but the high needs to be broken for me to be 100% on it.

 

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