Market Commentary 13/05/16

EUR/USD – Demand Zone Failed Price Now Dropping Lower

The demand zone which I notified people of in my last post has been broken by the market, the price is now in a steep decline and is looking likely to continue lower.

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When the price dropped into yesterdays demand zone it failed to provide a move higher, since no price action signals appeared when the market entered the zone it meant no buy trades could be placed.

With this new drop taking place today it sheds doubt on if the uptrend will continue higher, in order for this to be confirmed we must see the market break the low of the swing higher seen on the daily chart. A break below here suggests the market is now entering into a downtrend and its possible we may see the price drop back to the lows of the entire consolidation the market has been in since the previous downtrend ended.

On Monday you should watch for price action signals inside the supply zone marked in the image, if a retracement occur back up into this zone wait for a bearish engulf to appear before entering short.

 

USD/JPY – Stop Run On The 1 Hour Chart

After the move lower which took place yesterday it seemed like the retracement USD/JPY has been in for the past 10 days was coming to an end, last night though another retracement to the down-move and a subsequent drop which pushed the market below the lows made yesterday.

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After the market made a new low the price began to rise early this morning, even though the price was rising it still looked at though another move lower was going to take place. This all changed with the release of the USD news which came out at the beginning of this afternoon. The news caused a large bullish candle to form which ended up making a new high, the following candle was an inside bar which was contained within the range of the large bull candle, after this the consumer news came out and pushed the price past the high of the large bull candle.

Initially the consumer news was bullish and pushed the market into the region where a lot of buy stops were found.

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When these buy stops were hit the candle turned bearish, what really important now is what price action begins developing after this stop run. If the stop run has been caused by banks placing sell trades we need to see a substantial drop and a break of the current low, otherwise there is the possibility that the banks could have been placing buy trades on each swing lower we have seen and the stop run was simply created in order for them to take some profits off these buy positions.

 

AUD/USD – Consolidation Broken, Price Now Moving Lower

The lower boundary of the consolidation as broken in the early hours of this morning, this break means the price is probably going to continue dropping next week.

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One thing I’ve noticed about this current drop is how the drop itself has not been swift, by that I mean we have not seen multiple big bearish large range candlesticks which is characteristic of a large drop taking place in the market. So far when the price has dropped it hasn’t been able to drop far before retracing.

This could be a sign of a lot of profit taking taking place by the banks, if the price is failing to drop a large distance it must mean somebody is buying, that someone has to be the banks because retail traders will not trade against downmoves.

I think unless we see a large downmove take place next week the current drop we’re seeing now could be the precursor to a larger retrcaement taking place against the downtrend.

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