Market Commentary 12/09/16

EUR/USD – Market Almost Spikes Into Supply Zone

The supply zone which formed as a result of last week’s drop almost had the market return to it today but unfortunately the market ended up missing the zone by 2 or 3 pips.

On the image you can see when the market opened last night it started to move higher, this move continued as the London trading session began but then at 10:00am a sudden move higher took place which nearly pushed the market into the supply zone that formed last week. I think that really the market has actually hit this supply zone it was just that the zone itself has not been marked correctly because if you look on the 15-minute chart you can see the way I’ve marked zone does not incorporate part of the drop which took place, there are two bullish candles which are not encompassed by the zone, if they were it would have meant that the spike we saw today would have actually entered the supply zone so I think my drawing of the supply zone is the reason why the market didn’t enter the zone as opposed to it not entering for a market related reason.

In the image above you can see I’ve redrawn the zone to incorporate the spike that occurred earlier today, I think this zone needs to be monitored for entries short as it seems like the banks are placing multiple sell trades into the market around this area. If you see the market move back up into the zone in the coming hours watch for an entry short in the form of a bearish engulfing candle.

USD/JPY – Demand Zone Broken By Move Lower

The upper demand zone which I mentioned in Friday’s post has been broken by a move lower today and the focus now is on whether the market is going to be able to break the lower zone or if the lower is going to cause another move higher to take place.

We can see the market broke through the demand zone this morning just after a small pause had occurred, since then the price has dropped further and it is now close to entering the lower demand zone. This zone had a higher chance of causing the market to reverse than the lower zone due to the fact it was created by the banks either taking a larger amount of profit off their trades or by them placing a larger number of buy trades into the market than what was placed at the zone above, as it stands I’m not sure if its been created by profit taking or trade placing but the point is it’s still an important zone which we need to monitor for entries long.

AUD/USD – Reacting To Demand Zone

Today the price of AUD/USD has fallen into the demand zone that formed at the bottom of the previous move higher and over the past couple of hours we have seen the market begin to move back out of this zone.

I think the market will end up turning back to the downside somewhere in the area I’ve marked in the image, this area marks the point where retail traders started to enter short trades so I think the reason the market is moving out of the demand zone is because the banks are taking profits off their trades in order to make these late short traders close their trades at a loss because closing their trades at a loss will put buy orders in the market which the banks can use to get more of their sell trades placed.

For now just watch to see if the market is able to move into the area marked on the image, if it does move in there watch for a bearish engulfing candle to form before going short.