Market Commentary 17/03/17

EUR/USD – Falling Out Of Daily Supply Zone

Today we have seen the market fall slightly out of the daily supply zone it raced towards after the FOMC announcement was made on Wednesday evening. The market entered the zone last night, but no drop took place until the US trading session began this afternoon. The current price action we’re seeing now is suggesting that we will see more down movement take place over the coming hours, but I doubt this movement will make the market drop below the lows of the upswing which caused the move into the daily supply zone to take place.

There isn’t really much to do for now in the way of getting trades placed. I still think a deeper move into the daily supply zone is going to take place before a reversal or retracement occurs, so there’s no point looking for short trades just yet. The demand zone formed from the up-move created by the FOMC still needs to be monitored for long trades, although I doubt we’ll see a move into the zone take place by the time the market closes later on tonight.

USD/JPY – Falling Towards Buy Zone

The reversal out of the daily supply zone we saw take place when the FOMC was released on Wednesday has continued today, and it’s now looking certain we are going to see the market drop into the daily buy zone after it spent the majority of yesterday consolidating between the 113.100 – 113.500 levels.

At the moment the outlook remains the same as what I gave in yesterday’s post. I think we’ll see the market drop into the buy zone and either retrace somewhere up to the point where yesterday’s consolidation formed or reverse and move back into the daily supply zone. How the market moves out of the daily buy zone will give clues as to which scenario is more likely to unfold. A sharp up-movement consisting of lots of bullish large range candles suggests we’ll see a move back into the daily supply zone take place, whereas a slow up-move consisting of a mix between small bullish and bearish candles indicates a retracement is probably in the works.

For the minute I recommend you wait until the market has started to move out of the daily buy zone before making a decision on whether to go long or short.


AUD/USD – Forming Similar Highs Inside Daily Supply Zone

As expected the fall out of the daily supply zone we were witnessing when yesterday’s market commentary was published did not continue last night. Instead a move back into the zone began which has today pushed the market up to the point where we saw two swing highs form yesterday. Over the past couple of hours we have seen the market drop, and another swing high has formed at a similar price to where the swing highs seen yesterday formed. The fact that we have now seen three swing highs form at similar prices to one another suggests that we may see some kind of reversal take place next week.

If we do I doubt the reversal will end up being very big, due to the fact the downswings which created each swing high only caused the market to drop a small distance. If a large reversal was going to take place we’d have to see significantly bigger swings form, as the size of the sell trades the bank traders can get placed is determined by the number of the buy orders entering the market, which itself is determined by the size of the upswing currently taking place. As it stands I think we will see a reversal out of the zone take place next week, but it will only be small, and it won’t be long before the market moves back into the daily supply zone and continues its ascent.




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