Market Commentary 02/12/16

EUR/USD – Small Drop Out Of Sell Zone

After almost hitting the buy zone went on a run higher last night which came to an end this morning after the market dropped out of the sell zone. The market is now moving higher again and I don’t think it’ll be long before we see today’s high broken.

The release of the NFP didn’t really cause much volatility, I thought we’d see a large move higher or lower take place when the news was released but all we ended up with was a spike back towards today’s high. I do think the market is now in the process of retracing back to the 1.0800 level, I’m not sure exactly where it will turn so we’ll have to watch for the price action to give us some signs the market is reversing once it reaches the 1.0800 level. As far as trades are concerned I would watch for entries long in the upper buy zone seen in the image. I doubt the market is going to move back to this buy zone by the end of tonight so keep an eye on the zone during Monday.

USD/JPY – Falling Towards Demand Zone

Currently the market is falling back towards the demand zone created by the move up towards the supply zone high, I said in yesterday’s post how a move down to this demand would be a sign we may still see a reversal out of the daily sell zone take place but upon closer look I think a move down to the would simply serve as a retracement before another move higher begins.

The reaction to the NFP was also subdued, I expected a sharp drop to take place when it came out, but similar to EUR/USD all we got was a small spike. At the moment the move down doesn’t really look like it’s going to continue into the demand zone, it looks more like a smaller retracement to me, I would want to see some kind of large drop take place either tonight or on Monday to have confidence we are actually going to see the market fall into the demand zone at the bottom of the image. For entries long I’d continue to watch the demand zone, there isn’t any supply zones we can use to get short trades placed at least not high probability ones so it’s best to just keep watching the demand zone.

 

AUD/USD – Reacting To Sell Zone

Yesterday’s move out of the demand zone has continued today and the market is currently reacting to the sell zone created by Wednesday’s drop.

The large bullish engulfing candle we saw form after the market fell into the demand zone for a second time did turn out to be the beginning of the move higher which pushed the market into the sell zone. You can see when the market hit the sell zone an hour ago it produced a bearish pin bar, I’m not convinced this pin is gong to cause the market to reverse back down to the demand, the price structure on the 5 minute chart suggests this pin is more likely to have been created by the banks taking profits off their trades than it has them placing trades to make the market reverse, so I think another move into the sell zone is could take place in the next couple of hours.