Market Commentary 25/04/17

EUR/USD – Moving Towards Gap High

The gap higher we saw take place yesterday pushed the market right up into a daily supply zone. Today we have not seen the zone get broken, but the market is currently making it’s way back up towards the high of the gap, so we could see the zone get broken later on tonight.

My outlook for the market hasn’t really changed since yesterday, no new developments have taken place which suggest to me the market is more likely to either rise or fall from where it is now, so the only advice I have for you at the moment is to just sit on the sidelines and continue watching the price action that forms over the course of tonight.

USD/JPY – Market Moving Into Daily Supply Zone

After the gap occurred yesterday we saw USD/JPY drop slightly, and it wasn’t clear if the market was going to continue dropping and push the market into the demand zone created by the gap, or if it was going to move up into the daily supply zone before dropping. Today we saw the slight drop come to an end, and the resulting move up which has taken place since then, seems like it’s going to cause the market to move into the daily supply zone.

I think we could see a large reversal take place when the market is inside the daily supply zone, due to the fact that it’s the last place where the bank traders got a large number of their sell trades placed. The up-swing we’ve seen take place since 17th of April may be caused by them taking profits off their sell trades, so as to make the market move back up to the point where they’ve already got trades placed, so they can get more placed at a similar price. If this is the case I suggest you watch for signs of a reversal beginning when the market is near the 111.500 level and the 112.000 level.

They already got some sell trades placed around the 111.500 level to cause the down-move to occur initially, (as evidenced by the swing highs which formed there on the 3rd 5th and 10th of April), so a reversal beginning around there is a strong possibility when the market moves into the zone. I doubt a move that deep into the zone will have taken place by this time tomorrow, so just keep an eye things for the time being.

AUD/USD – Reversal Into Daily Demand Zone

It seems like the up-move out of the consolidation did come to an end sooner than expected, as the bearish candles which I thought were not going to cause the market to reverse in yesterday’s post, did actually make the price reverse.

Since the reversal has come to an end we’ve seen the market drop back into the point where the consolidation took place on the edge of the daily demand zone. A little reaction has taken place over the past couple of hours, but I think this will end soon, and we’ll either see the market fall deeper into the daily demand zone or break it completely and fall into the zone below.

Regardless of which zone it falls into, if we see the market drop from this small retracement, the supply zone I’ve marked with a question mark will become a zone which you need to keep an eye on, because if the market subsequently moves up out of one of the demand zones, it’s likely we’ll see it react to this supply zone, and that may provide us with an entry long or short depending on how the market reacts to the zone.