Market Commentary 07/03/16

EUR/USD – Small Pullback, Market Beginning To Rebound

The up-move caused by the NFP release last week encountered a small pull-back today.

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The drop began when the European trading session opened at 7.00 this morning, after falling for a couple of hours the market then found support at the demand zone marked in the image.

The support level talked about in yesterday’s post failed to stop the market from moving lower, although it may still give us an entry long tomorrow.

As the US session started we saw some signs of buying enter the market, first there was a bullish engulfing which was counteracted by a small amount of selling, another engulf then followed, this was significantly larger than the previous engulf and has caused the up-move seen over the last few hours.

As it stands the continuation higher could now be underway, a break of the highs is needed in order for this to be confirmed, for trading opportunities I would watch the support level marked in the image, a small drop lower on this move up could end at this support, if it does then a price action signal could give us the entry we need to get long into the second phase of this up-move.

 

USD/JPY – Still Trapped In A Consolidation

USD/JPY has continued consolidating in the range which formed last week.

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It would have been possible to make some profits from this range if you have read my article “All you need to know about consolidations”.

Its obvious from the image above that had you taken any trades in the middle of the consolidation its likely you would have lost money, but buying and selling at the upper and lower boundaries gave you the opportunity to make a few pips if you got in and out at the opposing boundary.

For now we still need to wait for the market to break out of this consolidation, looking at the daily chart you can see how we have had several days of indecision in the market, indecision always precedes large movement, which ever way the market ends up breaking expect the move to be large and consists of multiple large range candlesticks.

 

AUD/USD – Finally Got A Pullback

We finally got the first real pullback on AUD/USD today.

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It came as the market gapped lower on last nights open, a 30 pip drop then followed which ended with a swift move up which broke last weeks highs.

We are still around 100 pips away from the 0.75866 resistance level, its likely a more significant pullback will take place once the market reaches this level, by then a large portion of traders will have entered long into this up-move and the banks will want to take some profits off their trades, when they do the impact their orders will have on the market will manifest itself in a pullback.

For entries long, you need to be watching the demand zone where today’s up move originated from.

Eagle eyed people will notice there are essentially two demand zones but I’ve marked them as one, the reason I’ve done this is due to the spread, if I place a trade at each zone then I would have to pay the spread twice but by combining them into one zone I’ll only have to pay it once.

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