Market Commentary 03/08/16

EUR/USD – Price Has Fallen Into The Banks Buy Zone

This past hour has seen the market fall into the zone where we know the banks last placed buy trades into the market.

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Now we need to wait until a bullish engulfing candle appears before going long as we need to see some kind of confirmation the banks are getting buy trades placed. The important thing to keep in mind is the price may still fall below the low of the area before turning and moving higher, this is because when the banks are getting trades placed they will try to get them placed as close as possible to each other, that doesn’t always mean they’ll be placed at exactly the same price which is why we might see a spike below the lows before a turn higher.

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Something which makes a spike below the lows even more likely is the fact a large collection of sell stops have built up  around the 1.11500 level. The banks might let the market drop into these stops so they can purposely get a large number of  sell trades placed all at one price as we know this is problem them typically have when getting trades executed in the market.


USD/JPY – Retracement After Hitting Old Demand Zone

Today USD/JPY has begun to move higher after hitting the zone that was created by the bank traders placing buy trades right at the beginning of the retracement on the 8th July.

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Although the market didn’t technically touch the zone I would still count the current move as a touch due to how close the market came to actually hitting the zone. The question we have to ask ourselves now is if the retracement is going to move up to the sell zone seen at the top of the last fall lower or if we’re going to see the market fall through the zone where the banks placed their buy trades ?

At the moment we don’t have enough price action to say which one it is more likely to be so it’s best to just wait to see what happens over the course of tonight and tomorrow.

AUD/USD – Retracement Potentially Coming To And End

In my last post we saw how a bearish engulfing candle had appeared at the top of the move higher that took place yesterday, I said how the engulf probably signaled the start of a retracement as it was created by the banks taking profits off buy trades placed at the swing low.

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As expected the bearish engulf did start the retracement but this might be coming to an end with the appearance of a large bullish engulfing candle this past hour. The engulf is looking like it could start the move higher which will break the swing high made when the retracement began.

If this is the case it means the demand zone I’ve drawn will become valid for looking for long trades, once the swing high is broken we will be able to say for sure that the swing low that may or may not be forming has been created by the banks placing buy trades which gives us another point of reference to watch if the market begins to fall.

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