Market Commentary 06/04/16

EUR/USD – Market Still Consolidating

 

EUR/USD is still moving inside the consolidation which has been forming over the past couple of days.

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A return to the upper boundary occurred last night although it didn’t hit the upper boundary line I had marked on the chart. The resulting move lower sent the market back down to the lower boundary and the market managed to break the swing low made yesterday. The new lower low is significant it probably made a large number of retail traders enter short positions. If you look at the candle which broke the low you can see its a bullish pin bar which has a large wick, the wick tells me that during g the time the candle was forming it would have looked incredibly bearish giving traders the impression a large move lower was about to take place.

The reason the move up we are seeing now contains large bullish candle is because of the traders who went short during the creation of the bullish pin bar closing their sell trades at a loss.

For now we still need to monitor which way the market breaks out of the consolidation, I have a feeling its going to break lower looking at where the other major currencies currently are but I could be wrong and another move up could take place, in either case just keep tabs on the market over the next couple of days.

 

USD/JPY – New Lower Low In Place

The profit taking we seen enter the market yesterday has resulted in another drop lower, the difference with this drop is currently the market has failed to close below the low.

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A consolidation formed due to the profit taking and a break lower took place around two hours ago. The new low is significant because the market is yet to close beyond the low made yesterday, this could be a sign of weakening momentum in the market and with the whole down move looking the way it currently looks I would say It wont be long before we see a pullback take place.

At the moment there still isn’t any decent technical levels we can use for trade entries, a supply zone did form when the market dropped out of the consolidation but the next candle ran back up into the zone which negates any significance it may have had.

AUD/USD – Market Moving Higher From Daily Demand Zone

 

Yesterday we saw the market drop into the daily demand zone and begin to move higher.

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I said we would see a reaction at the breakout point which may cause a deep pullback, whilst we didn’t get a proper deep pullback to the 76.4% retracement level we did see the market turn at the 61.8% level which is still technically a deep pullback albeit a weak one.

After the market hit the 76.4% level another move higher took place, a second reaction to the breakout point filed to push the market lower which is to be expected as technical levels always decrease in significance after they have been tested once. The move higher taking place right now could be the beginning of an altogether bigger move which could end up breaking the high of the whole move lower, as for technical levels the small 1 candle pause we saw take place upon the markets return to the breakout point could manifest into a demand zone so long as the next few candles remain bullish, if they do then the demand could be a good place to look for long trades.

 

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