Market Commentary 07/10/16

EUR/USD – Sharp Move Higher Towards Supply Zone

Early this morning the market broke through the bottom of the buy zone which it had entered yesterday afternoon, now it’s moved back through the buy zone is close to entering the supply zone created by Wednesday’s drop.

aviary-photo_131203235616819547I said in yesterday’s market commentary how EUR/USD, AUD/USD and USD/JPY were all at critical places where reversals could begin and you’ll see when we take a look at the other currencies how they all virtually reversed in sync with one another. The outlook now still remains one of more downside, I think this big move will end up terminating somewhere inside the supply zone I’ve marked on the image, the tiny bit of selling we’re seeing now is probably from he intra-day bank traders taking profits off some of the long trades they were able to place before the move up began, another short move higher I think is likely to take place so watch for entries short when the market enters the supply zone.

USD/JPY – Retracement Or Reversal ?

Last night USD/JPY  fell out of the daily supply zone we’ve been anticipating a retracement to begin from for the past few days, now that it’s fallen we have to be on the lookout to see where the next move higher may originate from but also need to be careful as the down-move out of the daily supply could actually be the beginning of a reversal.

aviary-photo_131203248266573644Currently the market is reacting to the demand zone I marked in yesterday’s post, there’s not enough price action at the minute to determine if the next move higher is going to begin from this demand zone or the demand zone found below, I personally think it will drop into the lower zone before reversing but this outlook could change depending on the price action we see form over the next few hours.

There is a chance the down-move out of the daily supply zone is the start of a reversal back to the 100.000 level, the reason I say this is because the daily supply zone formed from the bank traders placing a large number of sell trades into the market, this whole move back up to the zone may have been created by them as a way to get more people to place buy trades as they will then be able to get more sell trades placed into the market. If this is the case we’ll see any up-move terminate around the point where the down-move out of the daily supply zone began from as the banks like to get their trades placed at similar prices.

AUD/USD – Falling After Hitting Supply Zone

At the moment AUD/USD is falling again after a sharp move higher at midday caused the market to spike into the supply zone which formed on the 5th October.

aviary-photo_131203263092832970The down-move from this supply has been quite sharp which leads me to believe that we’ll see the market break through the lows but then again a lot of times in situation like this the market just returns to the point where the up-move or  down-move originated from and then proceeds to move back in the direction to which the move took place so we might see the market move back up again in a couple of hours.

If it does start moving back up watch for entries short at the upper edge of the supply zone.

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