Market Commentary 11/04/17

EUR/USD – Small Retracement Towards Supply Zone

The small move higher which began yesterday has continued today, with the market now making it’s way up towards the supply zone that was created by the drop which took place from last weeks consolidation.

It could be that this small retracement is taking place as a result of the bank traders either taking profits off, or closing the sell trades they got placed earlier on in the move down. They may be doing this because they want to cause the market to reverse by placing buy trades once it enters the daily demand zone. If this is the case you can expect to see a reversal structure form when the market drops into the demand zone. A reversal structure is basically a structure in the market which has multiple up and down swings forming with the lows of the swings forming at similar prices to one another.

If something like that starts to form when the market drops into the daily demand zone, it’ll be a good sign a reversal out of the zone is going to take place, so we’ll have to watch for bullish engulfing candles to form if the structure begins forming.


USD/JPY – Continued Drop Suggests Reversal

In yesterday’s post we saw the market retrace slightly after moving up towards the supply zone last Friday. Today, what initially looked to be a retracement has now developed into a complete reversal, and the market is currently back inside the demand zone which caused the swing higher to occur last week.

I’ve got a feeling that if this drop continues we’ll see the market break through the demand zone later on tonight. If the market drops through the zone the focus will still be on getting sell trades placed. There isn’t any recent demand zones below the current market price which we can watch as points where potential reversals or retracements may occur, so being on the lookout for signs of the bank traders taking profits off their trades will be important if the demand zone winds up being broken.

For now be on the lookout for entries into short trades. I think a retracement of some sort will take place shortly after the demand zone is broken, hopefully the drop which causes this retracement to come to an end will create a supply zone which we can use to watch for entries into short trades.


AUD/USD – Sharp Drop Out Of Daily Demand Zone

The retracement back into the daily demand zone we saw take place yesterday has come to an end today, with a sharp drop which caused the market to fall back down to the current lows taking place a couple of hours ago.

If this drop continues and causes the market to break completely through the current low (i.e multiple bearish candles close below the low), the supply zone I’ve drawn from the source of the drop will be a suitable zone you can use to look for entries into short trades, as it will become the most recent point where we know the bank traders have got a large number of sell trades placed into the market.

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