Market Commentary 25/05/16

EUR/USD – Stop Run On The 1 Hour Chart

This past hour we have seen the market drop into a concentration of sell stops which had accumulated below the current low in the market.

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The breakout zone which I marked in yesterday’s post did not end up being hit and is not suitable for trading anymore due to the length of time the price has been away from the zone.

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On the open orders graph we can see a large amount of sell stops had accumulated at roughly the 1.11250 price level. The candle we are currently seeing is the reaction to the market hitting these stops. If the price manages to hold and move higher watch for a break above the high of the current drop on the 1 hour chart before looking for long entries. If the price doesn’t hold and the market ends up moving lower, watch for a bearish pin bar to form on a small retracement or pause.

 

USD/JPY – Price Climbing Up To The Supply Zone On The 1 Hour Chart

After suffering a small retracement lower last night the price of USD/JPY has continued to rise and is now in close proximity to the supply zone at the top of the previous move down.

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We did not see the market return to the demand zone which formed yesterday and this zone now also becomes invalid for trading.

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Looking at Oanda’s graph we can see there is a lot of buy stop orders found inside the supply zone. If the banks are indeed planning on placing more sell trades when the market runs up into this supply zone the buy stop orders will help them get more of their positions placed onto of the buy orders which are currently coming into the market from trader placing buy trades.

Watch to see what price action comes up when the market enters the supply zone. If you start seeing bearish price action i.e bearish pin bars – engulfs – and generally more signs of selling, wait until a big bearish engulf appears before taking a short entry.

 

AUD/USD – Price Moving Lower After Large Bearish Engulfing Candle

Yesterday we saw the market price shoot up in the form of a large bullish engulfing candle, this was a possible signs of reversal taking place but the price action which followed has cast doubt on this theory.

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The price nearly managed to make a new high but a supply zone which I forgot to mark in yesterday’s post put an end to up-move and is currently pushing the market lower. If you missed on the supply zone which stopped the up-move there was another opportunity to get a short trade placed using the supply zone which formed on the reaction to the first supply zone.

Tomorrow keep an eye on the demand zone at the bottom of this retracement.

Although the demand is relatively old by now it may still be a point where the banks will want to take more profits off their sell trades due to their not being enough sell orders present on the first drop down. If they decide to take more profits than its possible for an up-move to be created from this demand.

 

 

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