Market Commentary 20/02/17

EUR/USD – Consolidating After Friday’s Drop

The drop which had just began when last Friday’s market commentary was published continued until the market closed on Friday evening. Today we haven’t seen this drop continue, and the market has instead consolidated between today’s current low and high.

Although the drop has been quite big and was relativity sharp, I’d hold off saying that it has been caused by the bank traders placing sell trades, like I suggested it would in Friday’s market commentary. I think at the moment there’s an equal chance we could see the market rise or fall from where it is currently tonight or tomorrow. There isn’t anything which suggests to me the market is more likely to rise than it is to fall, so for now I think it’s best to just stay out of the market until more price action has formed.


USD/JPY – Retracement Back Into Buy Zone

Today we have seen a small retracement back into the buy zone which got broken at the end of last week take place.

So far we haven’t seen a move above the buy zone occur, so at the minute I think it’s unlikely a move back up to the high of this current swing lower is going to take place. If we do see a move develop tonight and it pushes the market back out of the daily demand zone, the point where the move originated from is the point you need to watch for entries long, as it will be a sign the bank traders have got more buy trades placed into the market.

Conversely if we see the market drop from where it is now it will be a signal the banks have got sell trades placed, and you need to begin watching the point where the drop began from for entries short, because if the banks have more sell trades left to place they could make the market move back up to this point to get them placed at similar prices to one another.


AUD/USD – Moving Towards Supply Zone Created By False Break

After a sharp drop out of the daily supply zone took place last week, it seemed like we would see some kind of continuation occur today, but what we’ve actually started to see over the past couple of hours is a move up back towards the supply zone created by the false break take place.

The fact the market has failed to drop deeper makes me a little bit concerned, as the move up we’re seeing now could be taking place due to the bank traders placing more buy trades into the market. I think if the move up continues and the market moves back into the supply zone, a sharp move out of the zone will be a sign the banks may be getting more sell trades placed to make the market reverse. If we see the market drop from where it is currently and move into the buy zone, a reaction back up to the point where this drop started from has a high probability of taking place so keep an eye on this area if we do in fact see it form.

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