Market Commentary 31/03/17

EUR/USD – Demand Zone Broken By Sharp Drop

The reversal out of the demand zone which I said in yesterday’s market commentary may occur today has not taken place. Instead we saw the market fall through the demand zone after a sharp drop took place last night. The fact the demand zone has now been broken highly suggests that we are going to see some more down-movement take place over the course of next week.

Although I think we’ll see more down movement occur, I’m confident some kind of retracement will also take place, due to the bank traders wanting to take profits off the sell trades they placed to cause the swing down to form. I think the retracement, if one ends up forming, will terminate somewhere near the supply zone I’ve marked closest to the current market price. This supply zone contains the 3 most recent highs where the bank traders could have a got a decent number of their sell trades placed.

If they want this down-move to continue and their trades to remain open, they will not let the market move a large distance past this zone, so be on the lookout for signs of a reversal forming if the market enters the zone next week.

USD/JPY – Retracement After Up-Move

The supply zone which the market had been moving in and out of over the past couple of days was broken last night, and it’s now looking likely we are going to see a move into the upper supply zone found at the 112.545 – 112.900 levels take place sometime next week.

Currently we are in the process of seeing the market fall slightly, but I think this will end soon and just turn out to be a small retracement before the move into the supply zone gets underway next week. For entries short I suggest you watch the supply zone seen at the top of the image. How the market reacts to this zone will give us clues as to whether we are likely going to see the market continue to move up over the coming weeks, or if we are going to see it drop, and move back down to the current lows where we saw this up-move originate from.

AUD/USD – Falling Out Of Daily Supply Zone

In yesterday’s market commentary we saw the market move back into the daily supply zone it had fallen out of due to a large drop which took place on the 21st March. Today we have seen the market fall out of this zone again, and it now seems like there a good chance we could see the market fall and break through the current low at 0.79865.

Unfortunately, there weren’t really any signs which suggested we were going to see a reversal out of the daily supply zone take place. A few bearish engulfing candles formed, but the fact they didn’t cause any sharp move lower to take place, suggested that they were more likely to have formed as a result of profit taking than trade placing. Even though no signs of a reversal occurred, the drop out of the zone has created a new supply zone which we can now use to watch for entries into short trades if the market returns to it the next week.

This zone is only valid for trading if the current drop we’re seeing now continues over the next few hours leading into the markets close at 10:00pm. If a move higher begins and pushes the market up, don’t look for short trades inside the zone next Monday, because it will suggest that the drop out of the daily supply zone has formed because the bank traders are taking profits off long trades placed at the current low.