Market Commentary 01/03/16

EUR/USD – Reacting To Daily Demand

 

EUR/USD has begun to react to the demand zone found on the daily chart.

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A drop beyond the lows was seen this morning although the market made a sudden move up soon after the low was broken, a small pullback then followed which ended with another drop which broke the low made by the previous move down.

Now we are stating to see some bullish price action, this could be a sign of an impending move higher, we must wait until the current swing high gets broken before placing any long positions.

 

USD/JPY – Engulfing Pattern ?

The supply zone which I talked about looking for a trade entry yesterday didn’t work out as planned.

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Ideally I wanted to see the market move into the zone before making another move lower as it was my belief the market could begin consolidating before it went down, when it dropped the zone to me became invalidated and I neglected to look for another trading setup inside the area.

As it currently stands I think USD/JPY has the potential to move higher from here, the thing that makes me wary though is if what we are seeing now turns out to be an engulfing pattern.

Not an engulfing pattern are most people commonly know i.e one candle engulfing another, but a pattern where the market keeps engulfing the previous candlestick without continuing to move in the direction of the engulf.

Tomorrow keep an eye out for price action signals around the support level, if the market is not going into an engulfing pattern then this level will be the first place where we may see signs of a move higher.

 

AUD/USD – Moves Lower From Resistance

The resistance level which ran through the supply zone talked about in my previous two posts provided another move down today but the market has since managed to recover.

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Notice how there was a strong surge into the resistance level which was quickly met with a significant bearish engulfing candle, the market fell lower for the next couple of hours until there was another move up back to the resistance, the market then fell for a second time.

The ISM manufacturing release quickly sent the market down further, this was counteracted when traders came into the market and began buying, leaving a bullish pin bar on the 1 hour chart.

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Right now the market is advancing higher from the bullish pin, as far as knowing when the move up is likely to end, I think the supply level marked above is a place where the market could encounter some resistance. Until the market reaches this supply its best to look for opportunities to get long.

The support level is the only real place where we could see a long setup occur, if the market moves back to this level tomorrow ideally after breaking the high caused by the surge into resistance it could provide us with a decent long entry.

 

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