Market Commentary 13/04/16

EUR/USD – Large Move Lower After Retest At Breakout Zone

When I published my last post yesterday the market had just tested the breakout zone where I said to watch for an opportunity to go short, within a couple of hours we saw the market test the zone again before falling substantially lower.

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You can see how there were two spikes into the breakout zone before the move lower got underway. Also, see how the market paused for one candle when the low was broken, its highly likely there were pending orders to sell here placed breakout traders, when the market fell into these orders there was suddenly an opportunity for the banks to take a small amount of profit off their sell positions.

Judging by the size of today’s downmove I now think its probable for the market to drop down to the daily demand zone found at the 1.11715 level, there is a chance that the downmove means the market is now going to drop back to the lows of the overall consolidation, if you look at the daily chart you’ll see the drop falls inline with the upper boundary of the consolidation the market has been in since the downtrend has ended, therefore if the banks have sold again they may want the market to fall back to the lows.

In regards to getting short, the supply zone created by the drop an hour ago may present an entry although make sure you wait for a bearish engulfing candle as zones which form after the market has risen ( or dropped in our case ) don’t tend to have a high probability of working out successfully when compared with zones which form when the market reverses.


USD/JPY – Pullback Confirmed


USD/JPY is now pulling back against the down-move which means we must begin looking for entries long.

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The other demand zone we marked yesterday didn’t end up being hit by the market but we have a new zone we can used to get a potential entry long.

We might see the market fall into this zone tonight due to the bearish engulfing candle which formed a few hours ago. This engulf is significant as it’s the first time in the current move up we have had a clear display of selling take place, even though its likely to have formed due to profit taking there is still a chance the banks may take a little more profit and cause the market to fall back into the demand zone marked above, if it does then watch for a bullish engulfing candle inside the zone.


AUD/USD – Retest At Breakout Zone


Yesterday I said how if the market was to break the supply zone I had marked you should draw a breakout zone around the highs it broke with the move up.

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A retest at the zone took place a few hours after the highs themselves were broken, there was an entry to be had on this zone but due to how late in the night it was its unlikely for you to have been able to get in.

The move higher from the breakout zone didn’t last long and the market soon dropped below the zone itself. This drop meant the lows which spiked the breakout zone actually became another breakout zone.

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So far there have been two spikes into the breakout zone, unfortunately these spikes have not been able to push the market any meaningful distance lower which means we could see a move back up to the highs of the move down. For now there isn’t any levels we can use to get a short trade placed, the breakout zone has already had two touches which means its unlikely for the market turn there again if it manages to return, just keep tabs on the market and watch to see if any lower lows or higher highs are made.

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