Market Commentary 18/04/17

EUR/USD – Sharp Move Higher Through Supply Zone

Last Friday the market continued to drop after it hit the supply zone on Thursday afternoon. It seemed like we’d end up seeing the market fall into the demand zone created by the sharp move into the supply zone but this didn’t happen, and the market instead reversed just before hitting the zone on Friday night. Since then the market has continued to reverse, with a sharp move higher through the supply zone taking place this afternoon.

Although the supply zone has been broken, I wouldn’t be too quick to say that it means we’re now going to see further up-movement take place over the next few days. The reason why is because it hasn’t yet broken the supply zone by a large distance, it’s only just spiked through it, which could be sign the banks want the market to fall again, especially if we see it drop over the next few hours.

If the market continues moving past the supply zone, it’s likely a move back up to the 1.09000 level will take place, as it’s a major swing point created by the bank traders placing sell trades. If the zone doesn’t break, and the market starts to drop again, it could be a sign the bank traders have made the market move up because they’re getting buy trades placed, and they now want it to drop again so they can get more placed around a similar price, which is the area the demand zone in the image encompasses, so watch this zone for entries long if you see the market drop into tonight or tomorrow.

USD/JPY -Retracing Towards Supply Zone

The drop out of the supply zone continued last week, with the market managing to break to new lower lows on both Thursday and Friday. Despite the fact new lows had been made, the market did start to retrace slightly on Friday and we’ve seen this retracement continue today, as the market has moved closer to the supply zone that formed during the swing down.

This isn’t a great supply zone, but it is one of the few points where the bank traders have recently got sell trades placed, so I think it is possible we could see the market reverse once it reaches the zone, just make sure you watch for signs of a reversal occurring before entering a trade, because it’s not a great zone to use to watch for trades.

AUD/USD  – Falling From Supply Zone

The market ended up breaking through the supply zone it was reacting to in my last post, but it has since reversed after moving into the supply zone found above yesterday night. It’s now falling back towards the daily demand zone which caused the move higher to take place. I don’t think this daily demand will cause another move higher to occur, but I think the demand zone below which has formed right at the bottom of the move higher will create a reversal or retracement.

Like EUR/USD, if the banks have caused this move higher to occur by getting sell trades placed, they could be making the market drop back to the demand zone so they can use the sell orders generated to get more buy trades placed at a similar price. We can’t be sure of this just yet, but it’s definitely worth keeping an eye on the zone for entries long, because if this is what they are doing a reversal back up to the supply zone will probably take place.