Market Commentary 19/05/16

EUR/USD – Origin Of Up-Move Broken

Today EUR/USD has broken through the zone which i marked as the origin of the last move higher, with this break a new lower low has been made which opens up the possibility of more downside movement in the near future.

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We can see how the previous low on the daily chart was broken early this morning and how the market has spent the majority of this afternoon falling below the broken low. Currently there is some buying coming into the market as up can see above, but at the moment the current hours candle is a bearish pin bar which is suggesting there may be more downside over the next few hours.

 

USD/JPY – Profit Taking Entering The Market

After the large up-move which took place yesterday bank traders have now begun taking profits off their buy trades.

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Each subsequent rise higher has been counteracted by selling coming into the market. A large bullish engulfing candle appeared earlier but an even bigger bearish engulf then formed. The candle seen immediately after caused the price to drop  into the demand zone which formed after yesterdays’ move higher, the market is currently reacting to this demand but so far we have not seen it cause any significant movement higher.

What we need to see now is if the market manages to make a new high above the highs which formed earlier today. If it does then more up-side is to be expected but if it doesn’t then we need to watch to see how the market falls, if it falls with multiple bearish large range candles then its possible the selling we are seeing is actually from bank traders placing sell trades instead of taking profits off buy positions.

 

AUD/USD – Demand Zone Failed

The demand zone which I marked in my last post was broken with the release of the FOMC news last night, the price has dropped lower since then and is now in close proximity to the beginning of the up-move which began on the 1st of March.

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As you can see from the above image when the FOMC came out the price dropped straight through the demand with no reaction taking place. After the drop we started to see more evidence of profit taking entering the market with the buying that I’ve marked with the arrows.

Due to the length of time the market has been falling I think it wont be long until we see a mutiday retracement take place.

Aviary Photo_131081457051329676If you look on the daily chart you can see how significant the decline the market has been in is. So far we have only had very small retracements take place and the time between each retracement forming is decreasing rather than increasing, this suggest we’ll soon see a much bigger retracement form as too many people will be entered short in the downmove and the banks will have to make the market move higher in order to cause these traders to lose money.

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