Market Commentary 01/04/16

EUR/USD – Breakout Zone Missed, Possible Bearish Pin Bar Forming

The market nearly hit the breakout zone we identified in yesterday’s post, the selling which entered the market when it made a new high could be forming a bearish pin bar on the daily chart.

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The price dropped into the breakout zone early this morning so it was unlikely you would have been able to get into a long trade. Although the market didn’t hit the zone its likely the breakout traders who went long closed their buy trades when the market came close to the zone itself which is the main reason the zone didn’t have an effect on the market when it began dropping this afternoon.

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On the daily chart we can see today’s daily candle is a bearish pin bar, if by the end of the day the candle remains as a bearish pin bar it could cause a drop come Monday, for now the best thing to do is wait and see how things play out.

 

USD/JPY – Potential False Break Of Consolidation

USD/JPY had a downside breakout of the consolidation the market was in yesterday, since then the market has reacted with bullish price action which could signal the breakout was false and the market is going to break to the upside.

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After a large downmove late last night the market made a small bullish pullback then proceeded to drop lower which made a new lower low in the market.

The lower low triggered a large amount of sell stops found between the 111.800 level and the 112.000 level, these stops could have been used by the bank to take more profits of their existing sell trades or to place buy trades with the expectation the market is bound to move higher over the course of next week.

If the up side momentum continues over the next few hours we could a bullish pin bar develop on the daily chart, if this turns out to be the case then its possible we will see another move up.

 

AUD/USD Demand Zone Spiked

The 1 hour demand zone manged to cause a small move higher but the market soon fell back below the zone after failing to make a new higher high.

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When the market hit the zone we can see a bullish engulfing candle formed on the 15 minute chart, this would have been you entry onto the trade had you decided to trade the zone. A move up then followed after the market spiked the area but this was countered by heavy selling due to the Non Farm Employment news.

Its probable the news triggered a large number of buy stop orders when it was released.

If you look at how the market moved before the news came out you can see how the market had fallen slightly lower, this move lower would have enticed traders into placing sell trades, when they place their trades the most logical place for them to put their stop order would be at 0.76000 round number or the swing highs at the top of the small move lower.

When the news was released the market spiked higher and penetrated the 0.76000 round number which would have executed the traders stop orders.

As it stands the market has bounced back from the drop caused by the news, if it continues to move higher past the high of the swing down created by the news release it means the bank traders did not place buy trades during the stop run and instead used them to take more profits off their buy positions.

We must wait to see how today ends, if the market continues to break higher watch for signs of a reversal somewhere near the current swing highs on the 1 hour chart, if it breaks lower then watch the lows of the current swing up for confirmation of more downside movement.

 

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