Market Commentary 02/05/16

EUR/USD – New Highs Being Made

EUR/USD had continued is ascent higher today with another large bullish candle appearing an hour ago.

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A demand zone formed at the open of the London trading session, this demand was the last place we know bank traders place their trades, if the price returns to this zone there’s a high chance it could cause a move higher. Judging by the length of this current move up I think its likely we’ll see a retracement soon, we are the point now where there are clear, obvious moves higher, retail traders will look at these moves and see them as confirmation of a strong trend, with each successive push higher more and more retail traders will enter the market with long positions mistakenly assuming the price is going to increase indefinitely.

Tomorrow watch for a retest at the demand zone, even though I think we are due for a retracement soon its my belief another move higher is possible which could originate from the demand zone in the image.

 

USD/JPY – Continued Decline More Profit Taking Entering The Market

USD/JPY has continued to fall lower after the dramatic downmove we saw take place last week.

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The price did drop again when the market opened last night but more profit taking has entered the market which has caused a small consolidation for most of today. Like EUR/USD I think USD/JPY could also suffer a retracement soon due to the length of the current down-move. Since the big drop occurred the price structure has changed, now there is always buying after each move lower and it seems like this buying is becoming more frequent.

The supply zone is a possible location for a short trade, it formed after I sent out my post last Friday, In the post I said how if we see a more substantial drop it may be zone we could consider trading because at the time the price hadn’t really declined that much. Since the price has dropped further this zone becomes valid, but due to how far down we are in this move I’m hesitant to go short as I think a retracement could occur soon.

 

AUD/USD – Price Failed To Move Lower After Bearish Pin Bar

 

In last Friday’s post I said how the bearish pin which was on the daily chart did not have a high probability of working out successfully due to how the price action which created the pin did not contain a strong move lower, whilst the pin hasn’t exactly failed it looking less and less likely a reversal is going to take place.

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Today’s daily candle still has the possibility to turn into a bearish pin bar, but we need to see the current move higher fail and drop below the most recent swing low in order to confirm this. A break above the high which I’ve marked would likely signal the end of the down-move and in-turn cause last weeks bearish pin bar to fail.

For now watch to see a break either above the swing high or swing low, a break above the high means you should start looking for long trades but a break below the low means you should looking for short trades, if either the high or low gets broken mark them as breakout zones and watch for a possible retest into the zone.

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