Market Commentary 26/04/16

EUR/USD – Possible Bearish Pin Bar On 4 Hour Chart

After a small reaction to the resistance level marked yesterday EUR/USD soon continued its move higher and the selling which is coming into the market now has the potential to create a bearish pin bar on the 4 hour chart.

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We saw a bearish engulfing candle when the market hit the resistance level but a continuation lower failed to materialize with the price consolidating over the next 6 hours. When the European session opened at 8.00am a quick move higher took place into the zone which I designated yesterday as a place when the bank are potentially going to place sell positions.

A reaction to the zone occurred and made the price retrace slightly back into the high of the consolidation which was going on last night, this drop coincidence with the open of the NY trading session at 12.00pm – 1.00pm, the NY traders then brought using the sell orders generated by the drop and the market moved higher.

Over the past hour we have seen selling enter the market in the form of a bearish engulfing candle, this engulf has wiped away a lot of the gains the market has made today and has also begun to cause a bearish pin bar on the 4 hour chart. I would hold off trading this pin for now as it likely for the market to react to the swing high made when the small retracement lower occurred earlier, if another move higher begins from these highs then I would suggest you keep an eye on the supply zone which the engulf has created on the 15 minute chart.

If what we are seeing is a reversal of the up-wards movement then this supply could give us a nice entry short especially as its only 12 pips wide.

 

USD/JPY – Is The Retracement Over ?

Yesterday we saw the price drop from the highs made last Friday and today we may be seeing the beginning of another move higher.

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The demand zone which I informed you was created by bank traders placing buy trades didn’t end up being hit, which means the banks must have come into the market and brought before the price came to near to where they placed their initial positions.

At the moment we need to see a breakout above the highs seen immediately to the left of the current price, this would be our first indication of more upside movement and another possible break of the main swing high at the top of this retracement, looking at the daily chart we can see that currently today’s candle is a bullish pin bar, if it remains a bullish pin by the time today closes it may be a possible long trade.

 

AUD/USD – No Drop Into Daily Demand

AUD/USD has been pretty similar to EUR/USD today in the way there was two moves up with a small retracement in between.

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At the moment there has been some selling and like EUR/USD a bearish pin bar is forming on the 4 hour chart. Before assuming the market is automatically going to move lower from the bearish pin I would like to see the lows marked above broken as this signals to use the momentum may be changing, I expect there to be a reaction to the demand zone which I’ve marked due to its location at the bottom of the retracement.

If this retracement is caused by bank trades taking profits off sell positions there is a possibility not all of them have been able to take profits at the price they wanted, which means when the price drops down into the demand zone some profit taking may occur which could give the market a small push higher.

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