Market Commentary 19/04/16

EUR/USD – Large Move Higher From Demand

The demand zone which I talked about in my last post has caused a large move higher today with the market breaking the swing high of the second spike into the supply zone.

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The market returned to the demand zone late last night so its unlikely you would have been able to catch it unless you stayed up all night or used a pending order to buy at the zone. As the market moved out of the zone it made a new high, further confirming up-wards momentum, a small drop took place over the next two candles with the second candle turning into a bullish pin bar which contained a lot of traders trapped in losing sell trades on the length of the wick.

Its likely part of what made the resulting move up strong was these trapped traders closing their losing sell trades.

What we need to keep an eye on now is what happens when the market drives into the area where the down-move originated from. If you go onto the daily chart you should mark this area as a supply zone, if the banks sold because they wanted the prior move up to reverse it means they must sell again when the market is inside this area otherwise they will lose money, so how the price action develops in this area over the rest of the week could give us clues as to which direction the market is going to trend in.


USD/JPY – Possible Upper Boundary Of Consolidation Established

Yesterday I talked about how we may see USD/JPY develop into a consolidation if the market turns at the swing highs made before the market dropped, today we have stated to seen some signs of a turn developing.

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There was a demand zone which you could have used for an entry long which I forgot to mark in yesterday’s post. The market dropped into this zone around 7:00am GMT time which tells us intra-day bank traders were behind the move higher as this was when the London trading session begins.

In the past few hours we have seen the market fall after it came into contact with the area where a previous swing high had formed, this is significant as it could be the beginning of the formation of the upper boundary in a consolidation, for this to be confirmed though we must see the market fall and break the lows created on the move higher today and yesterday.

For now I would say watch to see if the market begins making lower lows, if it does then find places to go short but don’t take any short trades when the market is close to the lower boundary as the risk reward ratio will not be that great.


AUD/USD – No Retest At Breakout Zone

We didn’t end up seeing a retest at the breakout zone which I marked on yesterdays charts, but we have seen a new higher high which tells us the momentum is still to the upside.

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A small pause took place just after the breakout zone formed but no spike into the zone occurred, there has been some selling in the market which is probably from bank traders taking profits off buy positions placed before the move up. For entries long I would watch the support level marked in the image, it may be that there are some short traders trapped in losing trades on the second touch of this support level, these traders may close their trades if the market enters into the region of the support level which mean a move high could take place because of their liquidation of losing sell positions.

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