Market Commentary 17/06/16

EUR/USD – Rebounds Higher After Big Drop

Yesterday we saw the price drop a large distance but amazingly the buying which looked to be traders taking profits off sell trades placed before the drop actually turned out to be people placing buy trades to push the market higher.

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If you remember I said how the fact the drop was nearly vertical would mean lots and lots of retail traders will have been entering short traders because they feel like the price is definitely going to continue moving lower. I presume this was a big factor in traders coming into the market and placing buy trades. The amount of sell orders that would have been coming into the market when the drop was taking place was likely to be enough for the banks to get a really big buy position placed into the market.

Whilst I do think this current move higher will continue next week, Ideally I would like to see the high marked in the image broken before I start looking for opportunities to get long as it would confirm to me that the momentum is now firmly to the upside and the banks who caused the move down to occur by placing sell trades have definitely exited their trades.


USD/JPY – No New Low, Profit Taking Still Holding The Market Up

The drop which pushed the price below the retracement low has not continued today due to more profit taking coming into the market from the traders who placed sell trades before the drop.

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The supply zone which I talked about in yesterday’s post didn’t end up causing a reversal which was fine because the zone did not become valid for trading anyway due to the fact the market was unable to make a new lower low after the zone was created. The three bits of profit taking we have seen come into the market so far today have all been at increasingly higher prices, I think if the price manages to drop below the most recent bit of profit taking we’ll see the down-move continue.


AUD/USD – Possible Stop Run On 1 Hour Chart

Last night we saw AUD/USD climb higher after spending most of the day falling lower, over the past  hour we have seen what I believe to be a stop run take place although this can’t be confirmed due to the lack of data on Oanda’s open orders graph.

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The stop run took place when the price spiked above the swing high made late last night. If you look at the chart you can see the price fell shortly after the swing high was made, this small drop would have made a large number of traders think the price was about to fall lower, they’d place sell trades assuming a bigger drop was going to take place and put their stop-loss above the swing high.

When the swing high was breached these stop were hit and the banks will have been able to place a large number of sell trades into the market. What we need to see now is a continued drop lower which breaks the swing low just below the current price. If this happens it would confirm more downside momentum and we’ll be able to start looking for opportunities to go short.

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