Market Commentary 28/11/16

EUR/USD – Big Move Higher Leads To Sharp

When the market reopened last night a small gap occurred which was followed by a large move higher that ended up breaking through the high of the supply zone the market was reacting to at the end of last week. The size of this move higher made it seem like the market was set to continue higher during the day, but as we have seen the market has now fallen all the way back down to the pre-market open price.

aviary-photo_131248197097705969The break of the supply zone high gives more weight to the theory that we are going to soon see the market reverse, although the sharpness of today’s drop does make me slightly concerned the market is not actually going to reverse and is instead going to continue moving lower. I think the point we really need to focus on now is the demand zone seen at the bottom of the image. This demand zone is important because it marks the point where we suspect the bank traders have got buy trades placed to make the market reverse.

It’s unlikely they have been able to get all of these buy trades placed which means they’ve got make the market move down again in order to get people to place sell trades which they can use to get their remaining long trades placed. There’s a high probability the move down we have seen today is the move down the banks have created to get more of their buy trades placed, if it is then we should see the market turn somewhere inside the demand zone as this marks the point where their previous buy trades have been placed.

Tonight watch for the market to reverse once it drops into the bottom demand zone seen in the image. Signs of a reversal could be a large bullish engulfing candle or a sharp move higher which consists of multiple bullish large range candles.

USD/JPY – Continued Drop Signals Possible Bank Reversal

The small drop which began last Friday has continued today with the price falling even more after the market opened last night.

aviary-photo_131248211362423757The fact the market has fallen even more means that now there’s a real possibility this swing down has been created by the bank traders placing sell trades to make the market reverse. Although the market did drop slightly on Friday, the swing it would have created had the market then proceeded to move back up would not have been typical of the types of swings seen before reversals take place in the market. Today’s continued fall makes the swing much more significant and thus increases the chances of it being created by the bank traders placing sell trades into the market.

What we need to do now is watch for signs of a second downswing beginning when the marked enters the green area I’ve marked in the image. I marked this area in Friday’s post but I’ve re-drawn it to incorporate the points where I believe the bank traders have now got sell trades placed. If the market comes back into this area watch for a large bearish engulfing candle to form as that would be a strong signal the second swing down is about to begin.

AUD/USD – Retracement Continues

The retracement AUD/USD has been in since the 21st November has continued today with the market moving deeper into the supply zone it spiked on Friday morning.

aviary-photo_131248228325730860The reaction to the market moving deeper into the supply zone has not been big, with the market failing to break the low of the move up into the zone. Currently we are seeing the price move up again and I don’t think it will be long before we see the market break through the supply zone and begin moving up towards the supply zone seen above where I think we will see the current retracement come to an end.

At the moment there isn’t much to do until the market reaches the supply zone seen at the top of the image, I don’t think we are going to see the market reverse out of the supply its in now so it’s best to wait until it’s reached the zone above


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