Market Commentary 08/03/16

EUR/USD – Highs Broken, Bearish Pin Bar On The Daily Chart

The highs I said to watch for a break in yesterday’s post have been broken.

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They were initially broken early this morning but the market failed to close beyond them, now we have had a second attempt at breaking them which has resulted in the market fully closing past the high. This has seen some sellers enter the market and push the market down making a new swing low, the move down has also created a bearish pin bar on the daily chart.

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This pin has confluence with the resistance level, if the market does end up falling lower the support level will need to be monitored for signs of an additional move lower.

If you decide not to trade the bearish pin the supply zone seen in the first image is a good place to watch for signal short, sometime the market retrace 50% of the pin bar and engulfing candles, if it does the we could see a spike into the supply zone which would end up begin a nice entry short.

 

USD/JPY – Consolidation Broken

My sneaky suspicion that the consolidation was going to break to the downside was confirmed late last night when the market broke the support level which formed the lower boundary of the consolidation.

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The break was significant, it only took one large bearish candle to break far past the support, after a retracement higher the market retested the broken support level which had become a resistance level.

We have a couple of levels to monitor for entries short.

The first is the supply zone created by the most recent drop a few hours ago, if the market manages to return to this level is could give us a nice entry short, however we must keep an eye on the resistance level found just below the supply. This level has confluence with previous swing lows, the best way to trade this level is to mark a zone around the lows which make up the resistance level, if the market comes back into the support zone trade it the same as if your were taking a supply and demand zone trade, watch for an engulf and put your stop above the top of the area.

 

AUD/USD – Stalling After Hitting Demand

The up-move on AUD/USD is showing signs of stalling after the market encountered selling at the highs.

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The two demand zones which were marked as one area in yesterday’s post have given the market a small push higher but we have seen a bearish engulfing candle appear which has stopped the move somewhat. If the market fails to break the highs of the engulf and the highs of the down-move it could be likely we are about to enter a more significant pullback.

For trades, we need to watch for more signs of a continuation higher or a break lower, for now its quite risky looking for entries long, the market has been moving up for a pretty long time now, there’s a high chance bank traders will want to take partial profits off of their trades so until the market breaks the low of the demand zone don’t try to get short.

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