Market Commentary 25/03/16

EUR/USD – Momentum Depleted – Consolidation Forming

 

The downwards momentum on EUR/USD has completely stalled, the market is now consolidating above the daily demand zone.

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You can see how no new high or low has been made today and the price action has been contained between yesterdays high and low. It likely today is a profit taking day for the banks where no real movement is caused by their presence in the market, its difficult to figure out if the market is going to fall lower on Monday down into the daily demand zone or begin moving high from the current consolidation, if the consolidation continues sell stops may build up below the lows of the consolidation from the trades who believe the market is going to move higher, we’ll have to check Oanda’s open orders graph on Monday to see if this is the case, for now all you need to do is wait for Monday, now decent prediction can be made about the market direction from the markets current location.

 

USD/JPY – Supply Zone Broken – New Higher High

The supply zone mentioned yesterday did not manage to hold the market and we have seen a break higher make a new high in the market.

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We can see the market broke the supply zone with a bullish large range candle, this was after the market made a small reaction to the supply zone itself.

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On the 15 minute chart we can see the reaction as the market entered into the supply zone.

Notice how there was no significant bearish engulfing candle ? and the subsequent move lower from the zone wasn’t very large ?

These were all signs that the supply zone was unlikely to cause a reversal, the engulfing candle at the top of the reversal was very small when compared to the previous candle, this means the reactive traders who had placed trades onto the move up into the zone where not shocked into closing their long trades, if they were the market would have made a large swing lower as opposed to a small drift lower which is what we saw.

When the market started moving back up, the move itself contained multiple large range candles which signal there is a high probability the market is going to break to the upside, this would be the point where if you had taken the supply zone trade you should be considering closing the position.

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The supply zone marked above is a place where I think he market has a good chance of turning due to its proximity to the highs of the consolation, if the bank who sold at the top of the consolidation wish to sell again they may do it when the market hits this supply area, on Monday watch to see if the market reaches the zone, if it does and you see a bearish engulfing candle form within the zone it may be a good opportunity to get short.

 

AUD/USD – Fallen Back Into Daily Demand

 

After the move out of the daily demand zone yesterday today we have seen the market make another move into the zone, the low of the first move out of the zone has yet to be broken which mean the market still has the potential to move up from here.

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Next week watch to see if the low marked above gets broken, in the event that it does prepare for a move lower back to the lows of the daily demand zone, if a break higher occurs begin looking for places to get long into the new movement.

 

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