Market Commentary 17/02/16

EUR/USD – Still Waiting To Get Long

EUR/USD has fallen slightly lower into the daily demand zone.

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One of the interesting things about the price action within this zone is how the lows of each drive down are all in a close price range In other words, each successive lower low is failing to penetrate much lower than the previous low, this could be a sign of large banks entering into the market.

When banks place trades they want to get all of their positions placed at roughly the same price, they don’t want the market to move far away from where they initially entered their trades if they still have more trades to place, this would end up reducing the risk reward ratio of their trades.

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Looking at the open orders graph allows us to see the sell stops have moved from the 1.11200 level to the 1.10800 – 1.10900 levels, it seems as though the traders who’s stops these are have moved their stops lower as they believe a reversal is about to take place, it will be interesting to see what happens to these stops over the next couple of days, it likely a news event may cause the market to spike lower into these stops, if this turns out to be the case then make sure you watch the market for an engulfing candle at the support level.

 

USD/JPY – Stop Run At 113.500

The demand zone that was containing yesterdays price action was broken earlier today by a stop run at the 113.500 level.

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Just before the market broke the demand zone we can there was alot of sell stops building up at the 113.500 level.

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Going into tomorrow I will be on the look out for price action signals in the demand zone created by the stop run earlier today, the low of the stop run is the point that the market needs to break in order to signal to me the pullback we are currently is coming to an end, for the moment, the pullback hasn’t ended, a new higher high was made earlier today so there is still a possibility the market could continue moving higher from here.

 

AUD/USD – Up-Trend Continues

 

In my last post I talked about how it would be a good idea to watch for an engulfing candle around the resistance level marked in the image, we did see a bearish engulfing but unfortunately it didn’t result in a successful trade.

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Whilst you could have entered using the bearish engulfing seen above on the 1 hour chart, a better entry could be found on the 5 minute chart, it has to be said though this wasn’t the best engulfing candle.

After being engulfed the market then gaped higher which was strange ? It’s quite rare to see a gap during the week, you usually see them at the start of the week when the market opens. After the gap the next candle turned out to be a bullish large range candle, it didn’t take long for the market to make a new high.

I think the up-move is likely to continue from here, as far as trade entries are concerned at the moment their isn’t really any obvious structure for us to trade, we need the market to move up so their will be new levels created that will allow us to find a trade entry.

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