Market Commentary 15/03/16

EUR/USD – Consolidating At The Lows

 

The swing low we looked at yesterday has been broken, the market is now beginning to consolidate around the low.

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The demand zone also ended up failing. The market fell slightly past the zone and broke the low, from here the market moved up slightly and was looking like a new up-move was about to break the swing highs. Another move lower then took place, this made a new lower low which was counteracted by a move up which made a new high.

Usually when the markets starts consolidating like this stops begin building up just below the lows, looking at the open orders graph shows us this is already happening.

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On the graph we can see how there is a large percentage of buy orders around the 1.1060 level, these are not stops, these are either take profit orders from traders who have been in profitable long trades (which is unlikely) or pending orders to buy when the market falls. On the other side of the graph we can see the sell stop orders. Currently these constitute to just over 0.5% of all traders using oanda, for a stop run to occur I would think we need to see a more substantial build up of stops.

Tomorrow we need to watch for a larger amount of sell stops to be placed below the low, at the moment there isn’t enough there for me to consider trading a stop run.

 

USD/JPY – Market Falling After Spiking Supply

The supply zone which was spiked by the market yesterday was hit again today and is currently pushing the market down.

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Whilst the market only manged to penetrate the outer edge of the zone yesterday, today the market drove deep into the zone before reversing.

Looking at the daily cart we can see the movement over the past couple of weeks is starting to form a consolidation. This means taking short trades could be risky as the market is near the lower boundary of the consolidation.

For entries long I would keep an eye on the area I’ve marked with a rectangle in the image.

I haven’t marked this area because it’s a demand zone I’ve marked it because it marks the place where all the swings up in the consolidation have formed from. If the market drops back into the area its likely the traders who brought creating the previous swings up will buy again, therefore if we see a bullish engulfing candle in here on the 1 hour chart it could be a decent entry long.

 

AUD/USD – Inside Daily Demand

The marked has dropped further into the daily demand zone located yesterday.

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We have begun to see some signs of buyers coming into the market in the form of bullish and bearish pin bars although we have yet to see the market make any king of significant move higher. I think we may see another small drop lower before the market starts giving us signals to go long, the highs marked in the image need to be broken before looking for an opportunity to get long

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2 comments

  1. Joachim Werner

    Hello,

    first I want to thank ypu for your great articles and your blog.

    I have a questionn: In your blog from yeasterday 3/15 you wrote: “On the graph we can see how there is a large percentage of buy orders around the 1.1060 level, these are not stops, these are either take profit orders from traders who have been in profitable long trades (which is unlikely) or pending orders to buy when the market falls.”

    1.1060 was under the marletprice at that time. So how could these buy orders be profit orders from long trades? Shouldn’t they be instead take profit orders from sell trades, because sell trades are closed through buy orders and vice versa.

    Please apologize my poor english,

    sincerely

    Joachim Werner

    • ForexMentorOnline
      Author

      Hi Joachim Thanks for your kind words. (your English is great btw)

      Your completely right, I’ve made a small mistake here. If they were take profit orders from long trades they would be sell orders like you said. I think these buy orders were more likely to have been pending orders to buy rather than take profit orders from sellers. As a whole I think retail traders dont tend to put take profit orders into the market, at least judging from my analysis, so its likely when the market fell an hour ago the buy orders were hit and executed and now the traders who’s orders they were are being put under pressure to close their trade at a loss, which will further increase the downwards momentum.

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