Market Commentary 20/04/16

EUR/USD – Stop Run And False Breakout

After the gradual move higher we have witnessed over the past couple of days today it seems as though EUR/USD may be nearing the end of its pullback higher.

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There was down-move which took place late last night which gave us a hint that the move up may be ending due to the size of the drop. The drops we had seen before this were small and did not contain large bearish candles which tells us the were people still buying when the market was dropping.

A small move higher then occurred with another drop below the lows of this move higher taking place shortly after. A move higher then managed to push the market above the swing high made when the first drop took place, when the market breached these highs many breakout traders will have entered into long trades as the bullish candle seen immediately before was a large range candle which traders would have seen as confirmation of the market wanting to move higher.

On top of the breakout traders entering long trades its likely there were a small amount of buy stops placed at the swing high by traders who thought the initial move down was a reversal, when the market broke the swing these buy stops and the breakout traders buy trades were probably used by the banks to place more sell trades.

The point we need to focus on now is the breakout zone marked in the image, this zone could give us an entry short and give the market another push lower over tonight and tomorrow.

 

USD/JPY – Retest At Spiked Demand Zone

USD/JPY failed to move lower last night and is now consolidating in a smaller range between the upper boundary and the demand zone which the market touched yesterday.

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A second touch at this demand occurred early this morning at the open of the European session, it may be that the intra-day bank traders saw it as being profitable to take the market up and make all of the retail traders who have been selling over the course of last night lose money, thus making themselves a nice profit and in the process putting buy orders into the market which they might use to place more sell traders when the market is at the upper boundary of the consolidation.

For entries short the upper boundary is still the place where I think its best to look for a possible short trade, for now keep an eye on the price action which develops around the upper boundary line, if you see a bearish pin bar with a large wick which goes through the swing high of the previous touch of the line then It might be a good idea to short.

 

AUD/USD – Retest At Support Causes Another Move Higher

The support level which I marked out in yesterday’s post was struck at the open of the European session and has caused the move up we have seen take place today.

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A new higher high signals more upside momentum but I’m wary of large move higher as the new high didn’t manage to penetrate far past the old high. We are seeing some more bullish price action come into the market this hour which could break the high made earlier today. If the bullish candle we are seeing now is followed by more bullish candles then the demand zone I’ve marked in the image would be a good place to look for a trade long, this must be confirmed by more bullish candles though, dont trade the area as it currently is.

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