Market Commentary 21/11/16

EUR/USD – Small Retracement Out Of Daily Buy Zone

Last week we saw the market fall into the daily buy zone which formed when the downtrend came to an end back at the beginning of 2015. Currently a small retracement out of the zone is taking place but I think it won’t be long before we see the market break the low and fall deeper into the zone.

aviary-photo_131242148336989527The retracement is only small but it could end up developing into something bigger if the market makes a sharp move higher. If it does, watch for an entry short in the big area I’ve marked in the image. This area encompasses the most recent points where the banks could have got sell trades placed into the market, if they want these sell trades to remain open, they’ll not let the market move a large distance past the lowest high where their sell trades have been placed ( marked with an X ) instead they’ll come into the market and place more sell trades to make the price drop back down to the retracement low.

USD/JPY – Possible Reversal Beginning ?

Today we have seen USD/JPY fall slightly out of the daily sell zone it entered last Friday, in the past few hours we have seen a tiny retracement push the market back into the zone but it looks like it’s going to be engulfed by the end of the hour.

aviary-photo_131242156780361633The reason I think this could be the beginning a reversal is because of how close together the two highs marked with arrows are to each other.

When the banks are getting sell trades placed to make the market reverse they’ll not have enough buy orders coming into the market to get all of their sell trades placed at one price, they’ll have get part of their sell trade placed at one price then another part placed at a different price. When they are doing this the prices at which they’re getting their trades placed will be close to one another, they won’t be the same but they’ll be close which is why I think the two highs marked in the image could have been created by the banks placing sell trades to make the market reverse as they are quite close together in terms of where they have formed in the market.

It’s still early days so I wouldn’t say for sure the market is now definitely going to reverse, we need more price action to form to give us a little bit more evidence a reversal is actually taking place. If a sharp drop occurs which pushes the market down below the low of the zone which I’ve said to watch for a reaction, then that would be a good sign a reversal is in progress, the drop will probably create a supply zone we can use to look for entries short so be aware of that if you see the a big drop take place tonight.

AUD/USD – Small Retracement Towards Supply Zone

AUD/USD is currently retracing towards the supply zone that formed at the end of last week, whether this supply is going to cause the market to move back to the downside remains to be seen but I do think we’ll see a reaction take place when the market enters the zone.

aviary-photo_131242167626993734If the retracememt continues and we see the market break through the supply zone marked with the black lines it could be a sign a bigger retracement is going to take place. If this occurs watch the demand zone that has formed at the bottom of the retracement for an entry long because if the retracement has been caused by  the banks taking profits off their trades they’ll have to make the market drop in order to take more profits off, depending on how much profit they still want to take the drop could terminate somewhere near the demand zone so watch for a bullish engulfing candle to form when the market enters the zone.

If the market doesn’t break through the supply zone the demand zone is not valid for trading, you still need to keep an eye on the market when it reaches the low as another low could end forming close to where the current low has formed.

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