Market Commentary 09/02/16

EUR/USD – Still Moving Higher From Demand

Today we saw the market continue moving higher from the demand zone the market hit yesterday.

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Currently the market is sitting at a significant resistance level that happens to be the source of the down-move which began on the 22nd of October last year, Whilst I don’t really put much emphasis on levels from the past I do expect we’ll see a pullback occur over the coming days, possibly back to the 1.11130 support level.

The 1.11130level has confluence with a demand zone seen on the daily chart, a move back to here could provide some trades with a high risk to reward ratio.

I would be hesitant to sell on the bearish pin bar which was created a couple of hours ago, the being is i think the down-move will be short-lived, If the market falls a little from where it is now it would lead reversal traders to begin placing sell trades, it would be likely the stop-loss orders of these trader will accumulate around the new high put in place earlier today.

If a pullback is going to develop over the next couple of days it is highly probable the stops from these reversal traders will be hunted by the banks in order for them to take profits on the buy positions they have placed around the 1.09300 level.

Tomorrow keep an eye out for price action patterns around the support level marked on the image, while there is a small demand zone just below the current price I think its unlikely for this zone to send the market back up.

USD/JPY – Beginnings Of A Consolidation ?

After falling lower form the supply zone yesterday, USD/JPY has extended its move lower today.

At the moment it has found a base at the 114.342 support level, it remains to be seen how long the market can stay above this support.

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There was a potential trade entry to be had when the market ran into the supply zone marked on the image.

While this zone did meet the criteria of my typical method of trading supply and demand zones, it still had the capability to offer you a few pips if you were quick to get out of the market.

My outlook for the next few days is one of USD/JPY consolidating between the support and resistance levels marked in the image. The support level is important because as soon as the market returned to it from the initial move higher it bounced back strongly, almost managing to break the highs of the candlesticks inside the supply zone, if the market fails to make a lower low tonight or tomorrow expect the consolidation to begin.

AUD/USD – Bullish Pin Bar On The Daily Chart

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The market failed to hit the supply zone I marked out yesterday, Instead the market fell lower over the course of the day but has recovered somewhat in the past couple of hours.

Currently the market direction for AUD/USD is pretty difficult to determine.

The lower low made earlier today is telling me the market is getting ready to move lower, but since then we have seen the market move back up and make a higher high, this recovery has also created a bullish pin bar on the daily chart.

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I’m gonna hold off trading this bullish pin for two reasons:

Number 1 the distance of the stop-loss from entry is almost 90 pips, for me personally this is too much risk to be taking on a trade which the price action confuses me.

The second reason is the confusing swing structure today means I’m not totally confident of the market moving either up or down, the pin bar itself is fine, it has a long wick and it seems to be closing into the body of the previous candle, if you do decide to take this trade make sure you keep the stop-loss below the wick until we see what price action the market creates tomorrow.

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