Market Commentary 01/02/17

EUR/USD – Falling After Sharp Move Higher

My apologies for not completing yesterdays market commentary, I was having some issues with the site and only managed to fix them late into the night so I didn’t have chance to write the market commentary.

We did see some big moves take place yesterday due Donald Trump saying that “other countries take advantage by devaluation. So much for a strong dollar”. This announcement caused EUR/USD to swiftly push deeper into the daily supply zone the market had risen back into on Monday. The size of this move has made it seem like we might not actually see EUR/USD reverse out of the daily sell zone again, but I think there’s still potential for a reversal to take place so long as the current move down we’ve seen today continues and breaks through the low of the swing higher.

If the market continues to fall and breaks through the low of the swing higher (marked with an X ) I think it’d be a good idea to watch for entries short at the supply zone which has formed at the source of today’s drop, as a move back up to this point is likely to take place if the banks have not been able to get all of their sell trades placed into the market. If the market drops into the demand zone created by yesterday’s swing higher and begins moving up again in a strong fashion i.e with multiple bullish large range candles forming, it’s a sign we might see the market break through the supply zone, but not before the supply zone has caused a small drop to take place, so be on the lookout for entries long in any demand zones that form during the move higher into the supply zone.


USD/JPY – New Swing Low Created By Drop

Trumps words on the dollar also caused a big movement to take place on USD/JPY.  The only difference was that this move was to the downside and caused USD/JPY to fall below the swing lows that had formed from the two upswings which had taken place from inside the daily demand zone. Although the market has now fallen below the swing lows it has not fallen below them by a distance large enough for me to say we are going to see the market drop through the daily demand zone.

As you can see, after making the new swing low the market started to rise back up again. This move up has formed as a result of the bank traders either taking profits off the sell trades they may or may not have got placed at the sell zone or from placing buy trades to make the market reverse. We won’t know which one it is until the market has broken through the highs of the sell zone or has fallen below the swing low of the move up we have seen today. I can’t recommend going long or short until one of these events has took place, so for now just keep an eye on what the market does over the next couple of days.


AUD/USD – Falling Out Of Sell Zone

Today we have seen another drop out of the sell zone created last week take place. This comes after Trumps announcement caused a significant move higher into the zone to occur yesterday afternoon.

I’m still not really sure what’s going on with AUD/USD, on the one hand I think we’re going to see the market move up and break through the sell zone but on the other hand it still looks as though move down through the buy zone could take place. I think for the moment the best idea is to just monitor the two zones to see which one breaks first and then begin looking for entries in the direction of the break.



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