This past week we saw the markets move in ways that were somewhat unpredictable. For instance, the Dollar having contacted the monthly supply was due for a drop, how significant was the question because it had already been tested and therefore the strength of this supply was put into question. Also considering the fact that the monthly chart is ranging there could be many ways that price would play out from the contact of this supply. Nonetheless what we witnessed was that price started to decline from the supply zone and then all of a sudden price reversed and headed back upwards.
Now the question is, was this moved fueled by the banks and their intentions to take price higher and remove the monthly supply OR was it merely a reflection of the buying/selling that was taking place as the banks adjusted their positions based on the contract expiration we were going through?
For us to truly know we have to wait and see what price does this week. Since contracts already expired and most of the pairs show signs that they have already accumulated the positions they likely intended, this next week should mostly reflect that.
Then we also have some pairs that their data does not reflect that the banks are finished adjusting their positions. One such pair if the $AUDUSD. One only needs to look at the data and see the massive discrepancy with the size of positions leading into contacts expiring and afterwards. This would lead me to suspect that we could continue to see some movements on the charts that will not reflect how the banks want to move price but instead the necessity for accumulating positions in preparation for what is to come.
So what will I be watching this week? I will be watching to see if the momentum that started to build this week will continue into next week. I have some doubts but because of the current dynamic in play in the markets, anything is possible. The higher timeframes are in play so therefore it will take some time for the charts to play out.
Kevin Araujo
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