Market Commentary 19/02/16

EUR/USD – Beginning Of A Move Higher ?

 

Last week EUR/USD dropped through the daily demand zone, instead of a large move lower it seems as though a recovery may now be about to take place.

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if we compare the two drops out of the zone you can see that the second drop made a lower low, this means for now the momentum is still to the downside, a break above the high is needed in order to confirm more upside.

On the daily chart we can see Friday ended with a bullish pin bar, if the market moves up from this pin it could signal the beginning of a move higher which will break the supply zone causing this downmove.

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Tomorrow the plan of action is to wait.

If the market breaks the high I marked on the image begin looking for opportunities to get long, if it breaks below the current low with the body of the candlesticks actually closing below the low aswell start looking for places to get short.

USD/JPY – Downtrend Underway ?

I believe the pullback on USD/JPY has come to an end and its now time for the downtrend to continue.

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The bearish pin bar signal off the support turned resistance level we identified last week turned out to be a good trade, the market has dropped around 90 pips since then and it looks to me as though we are about to see more downside over the coming week.

Tomorrow I would look for an entry short in the supply zone marked in the image, if the market returns to this zone and produces a bearish engulfing candle it could be a good way to get short into the downtrend, remember to look on the lower time-frame for a lower risk entry.

 

AUD/USD – Bullish Pin Bar Off Support

 

After a significant decline last week AUD/USD has made up a large portion of its losses with a Bullish pin bar on the daily chart.

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Whilst this pin does not meet the exact criteria of typical high probability pin bars ( it closed bearish rather than bullish) the size of the wick on this pin leads me to believe its likely we’ll see more upside over the course of the week.

A break above the current high is critical to confirming the uptrend is still intact.

If we analyze the wick of the pin on a lower time-frame we can see it was created by a strong move up rather than a slow grind, this is important because pin bars in which the wick is created by a slow move up or down rather than a quick move in one direction have a higher probability of working out successfully than ones in which the wick is created by the market slowly moving higher or lower.

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The support level marked above is the place you need to be monitoring tomorrow for trading opportunities.

Currently the market has just spiked the supple zone which created the initial down move seen last week, if the market moves lower from here its likely the support level is a good place to look for an entry long.


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