EUR/USD – Beginning Of Downtrend ?
Early this morning Donald Trump was elected president of the United States Of America. The effect this has had on the worlds financial markets has been drastic, with huge swings taking place when the results were released and in the hours after. On EUR/USD there was a massive 5 hour up-swing when the news first came out, this didn’t last and currently the market is trading below the price the market was at before the results were released.
The up-swing caused the market to break through both the daily sell zone and the daily supply zone where I expected the market to reverse and the downtrend to resume a couple of weeks ago. With the market now falling again, I think this down-move is the beginning of the next phase in the EUR/USD downtrend. The swing low seen at the 1.08506 level will probably end up being broken within the next couple of weeks, once this low is broken a drop deeper into the daily buy zone found between the 1.07056 – 1.08678 level is likely to occur with a small retracement taking place shortly after before the drop through the zone has taken place.
At the moment there still isn’t really anything we can do get short trades placed, we must wait for the markets to calm down a little for more market structure to form, then we can hopefully find some supply zones which are suitable for trading.
USD/JPY – Initial Shock Turns Into Large Recovery
The shock of Donald Trump winning the US election initially caused the price of USD/JPY to fall but it later recovered and is now close to the pre-election market price.
The drop actually originated from the supply zone created back on the 28th October but I wouldn’t say the supply zone caused the drop to take place, it was just chance the results of the election fell inline with where the supply zone had formed. The fact the market has managed to recover from its drop leads me to believe that we might be seeing the beginning of a large retracement higher or even a complete trend reversal. I’m not sure which it’s more likely to be at the moment but I do strongly believe we are going to see further up-movement over the coming weeks.
Similar to EUR/USD there isn’t any levels we can use to look for entries long at the moment so just stay out the market for now.
AUD/USD – Continued Downside Likely
A sharp move to the upside seen last night made it seem like maybe AUD/USD was getting ready for an upside breakout but the results of the election have pushed the market lower, and it now looks like we are going to see more downside over the coming weeks.
The supply zone which formed at the top of the drop is a place you can use to look for entries short if the market move back up. If the drop has been caused by the bank traders placing sell trades they might not have been able to get all of these sell trades placed before the drop occurred. If this is the case they’ll have to make the market move back up in order to get people to place buy trades, as that will enable them to place the rest of their sell trades into the market. The sell trades will be placed close to where their other sell trades have been placed which is around the area of the supply zone so watch for bearish engulfing candles to form inside the supply as that will be the signal the banks are getting more of their sell trades placed.