Market Commentary 03/05/16

EUR/USD – Bearish Pin Bar On The Daily Chart

 

I said yesterday how it was my belief we would see another up-move on EUR/USD before a retracement took place, this morning we had a relatively big move higher but now we are seeing the price drop, it could be that this is the start of the retracement.

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The move up tells us that a lot of retail traders probably went long and a large portion of the downmove we are seeing now is a result of these long traders closing their losing long positions. I think the demand zone is still a point where we could see the price reverse or at least pause for a small while when it returns, this demand falls inline with the previous swing highs you can see on the daily chart, a retest at these is usually common during retracement scenarios so since we have the demand zone at the same location it could be possible for the retracement to end around this point.

On the daily chart we can see how the current downmove has turned today’s candle into a bearish pin bar, I think this pin will cause some down movement but I’m not convinced the reward outweighs the risk so I’ll try to find an entry on a lower time-frame.

 

USD/JPY – Bullish Pin Bar On Daily Chart

 

USD/JPY seems to be doing the inverse to EUR/USD today, whilst the price is declining on EUR/USD on USD/JPY its rising, which means the downside momentum could be coming to an end.

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I think it’s too early to say for sure whether this is a beginning of a retracement, ideally I want to see the high marked above broken, that wold say to me the momentum has switch and we have a higher chance of seeing more upside over the coming days.  The move higher has formed a bullish pin on the daily chart although like the bearish pin on EUR/USD I’m not convinced by the possible risk reward ratio of taking this trade.

For now watch to see if the price manages to break the high, if it does then I would say the retracement is confirmed and we should begin looking for opportunities to go long.

 

AUD/USD – Substantial Down-move After RBA Announcement

 

Last night the royal bank of Australia announced it was dropping interest rates to 1.75% this caused a big downmove on AUD/USD and for now it seems like we could see more downside movement over the rest of the week.

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The point where the announcement was released was very close to where the bank traders sold previously so its possible they purposely drove the price up in order to sell where they sold before. I think with this release we could see a lot more downside over the coming weeks, at the moment we are seeing the bearish candle get smaller and smaller so its likely for us to see some profit taking enter the market soon.

Until we see the profit taking there isn’t  much we can do in terms of placing trades, the new low I’ve marked had the potential to be a breakout zone but I think the price has dropped too far away from it for the breakout traders to still be present in their trades.

 

 

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