Market Commentary 22/02/16

EUR/USD – Daily Demand Completely Broken

The bullish pin bar we seen on the daily chart failed to materialize into another up-move today, instead we got large drop through the demand zone.

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Its likely this move lower is going to continue throughout tomorrow and the rest of the week, tomorrow I would monitor the resistance level marked in the image, if the market begins to pull back up to this level it could provide us with a price action signal that we can use to get short into the next down-movement.

USD/JPY – Supply Zone Didn’t Hold

 

The supply zone we talked about looking for a place to short into the downtrend was hit earlier today.

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Unfortunately its likely this trade would have turned out to be a loser had you not been quick enough to react to changes in the market.

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It’s a shame as this was a good setup with a nice clean entry and a good potential risk reward ratio.

As the market spiked into the zone we can a bearish engulfing candle was produced, this is considered a significant engulfing candle due to the preceding bullish candle itself being large, had you taken this bearish engulf setup your risk would have only been 18 pips which isn’t really much to lose when you think about it.

After the spike the market drifted lower slightly before moving back into the supply zone, notice how the first move lower also created an additional supply zone, if you missed the first entry on the engulfing candle its possible you could have used this new zone as a second chance entry.

As far as tomorrows concerned I would wait for more market structure to be created before going long or short, Its my belief the pullback is indeed over and the market will begin moving lower again over the course of the week, the problem is there are no clearly identifiable levels to which we can use as a way to enter the market.

 

AUD/USD – Advances Higher From Bullish Pin Bar

 

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The bullish pin bar setup described in my last post has pushed the market significantly higher today, enough to make a new higher high.

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Yesterday I said how the supply zone should push the market lower enough so that it would retest the support level, whilst we did see a small move lower the support level was missed by only a few pips.

As the move up got underway there did turn out to be another signal to get long.

The bullish pin bar marked in the image,was a good trade for a couple of reasons….

The first was that the pin bar itself had a large wick which is always a good sign of a large rejection, the other was that the level the pin bar reacted to was the point where alot of traders would have entered into long trades just after the market opened due to the gap.

Their expectation was that the gap higher was a sign of more upside movement over the course of the night, eventually this is what happened, the reason the wick of the pin spikes down to this level is to make all the trader who went long close their trades due to them believing the spike down is going to continue lower.

The majority of them close their trades, by doing this they unwittingly fuel the movement higher.

Keep an eye on the 0.72000 daily support level tomorrow, its likely there will be a move lower early in the morning back to this level so watch for any pin bar or engulfing candles to appear.

 

 

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