Market Commentary 12/05/17

EUR/USD – Sharp Move Higher Breaks Tuesday’s High

In yesterday’s market commentary we saw how the market had begun to move up towards the high which had been made by the drop which occurred on Tuesday. Today we’ve seen the market break through this high, and it’s now looking like we’ll see a move into the supply zone at the top of the image take place sometime during next week.

The move has created a demand zone which you can see I’ve marked out with black lines. If the market enters the supply zone and then proceeds to fall back down to where this demand zone has formed, it’s likely it’ll cause another move higher to occur, as it’s currently the most recent point in the market where the bank traders could have got buy trades placed.

For now I suggest you watch for signs of a reversal taking place inside the supply zone. If the drop which created the supply zone has formed as a result of the bank traders getting sell trades placed to make the market reverse, we’ll should see another swing down develop when the market enters the zone.


USD/JPY – Sharp Drop Breaks Low

In addition to seeing a sharp move take place on EUR/USD, we also saw a sharp move occur on USD/JPY, only this one caused the market to break through a low instead of a high.

The low in question was the one made by the bullish pin bar that formed yesterday. This pin bar formed right after yesterday’s market commentary was published. It caused a small move higher to take place after it’s formation, but the move did not last long, and the market soon started to fall back towards the lows of the pin. The fact the market has now broken through the lows does not really change the outlook that much. I still want to see the market fall further before coming to the conclusion that this drop has been caused by the bank traders getting buy trades placed, so on Monday I suggest you just wait for more price action to form.


AUD/USD – Falling From Supply Zone

As well as seeing a sharp move occur on USD/JPY and EUR/USD, we also saw a sharp move take place on AUD/USD. This move has pushed the market into the supply zone I marked back at the beginning of the week. The market is currently falling from the zone, but I’m not sure if this fall is likely going to continue and push the market below the lows, or if it’s going to end and cause another move higher to take place.

I think if the market moves out of the little blue box I’ve marked at the bottom of the sharp move up, it’ll be a good sign we’ll see the move continue next week and cause the market to break above the supply zone. If the market doesn’t react to the blue box and just keeps on dropping down to the point where I’ve marked the red line, it’s likely we’ll see it continue to fall on Monday, but not necessarily break through the current low.

For the moment, I’d just keep tabs on the price action that forms over the next few hours.

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