Market Commentary 24/01/17

EUR/USD – Second Push Deeper Into Daily Supply Zone

Today we have seen the market push a little bit deeper into the daily supply zone it re-entered on Friday afternoon. The small drop that was occurring when the market was inside the zone yesterday did come to an end shortly after my market commentary was published, and not long after that the market made a new higher high. Since this higher high has been made another drop has taken place, but the current price action is suggesting that this drop is also going to soon come to an end and we are going to see another move higher take place.

The current move higher we’re seeing occur has created a new demand zone which you’ll probably see the market react to if returns to the zone after pushing deeper into the daily demand zone over the next couple of days. This demand isn’t suitable for trading due to the fact it’s likely we’ll see the market reverse out of the daily supply zone, but it may provide a bounce which will push the market back up into a supply zone that’s formed as a result of the market reversing, so it’s not entirely useless this demand zone.

I think if the market drops tonight and falls all the way down to below the lows of the demand zone, it would be a good sign we might be seeing the beginning of the reversal out of the daily supply zone take place, and we should start looking for entries short at the point where the drop creating the reversal originated from.


USD/JPY – Possible Deep Pullback In Progress

When yesterday’s market commentary was published we had just seen the market react to returning to the demand zone that had formed at the beginning of the last swing higher.  This reaction failed to cause any significant up-movement, and within a few hours the market had begun falling deeper into the demand zone. This fall continued throughout the night but came to an end right when the market had reached the lower edge of the demand zone. Since then the market has been moving higher and is now close to breaking above the highs of the demand zone.

At the moment it’s too early to say whether this is actually a reversal out of the demand zone but so far it is looking quite promising. I think if the current up-move continues and the market breaks above the high marked with a red line there’s a good chance we’ll see it proceed to move into the sell zone that’s caused this current swing lower to take place. The only way to completely confirm that a deep pullback reversal has occurred is if the market breaks above the highs of the sell zone so we are going to have to monitor the reaction the sell zone creates to determine whether a reversal is going to occur.


AUD/USD – New Higher High

The messy price action on AUD/USD has continued today with the market making another new high which has failed to break last weeks high by a large distance.

All of the highs we have seen get made since the 17th have all been relatively close together in terms of the prices at which they’ve formed at which suggests they have formed due to the bank traders getting sell trades placed to make the market reverse. There’s no way to confirm this currently so I don’t recommend getting any short trades placed, but I think that if a down move occurs and pushes the market below the low I’ve marked with a red line, start watching for entries short around the supply zone I’ve marked on the image as that will be the point the market cannot break if the banks have actually got sell trades placed.

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