USD/JPY – Holding At 1 Hour Support
USD/JPY seems to have found some support at the level I marked out yesterday.
Currently the price is trapped between support level and today’s high, this is causing the market to consolidate.
Due to this consolidation I made the decision to close the bullish pin bar trade I took yesterday.
The reason I closed it was partly down to the stalling price action seen at the point marked with an X on the image. It wasn’t apparent at this point the market was going to enter a consolidation, I was pretty confident yesterdays high would be broken by another thrust upwards.
However, when the bull candles started producing wicks, it became obvious to me the market was going to have trouble breaking the high as the initial momentum we saw from today lows dissipated.
Going into tomorrow I think the market will continue consolidating between the support level and the highs made yesterday, for now my outlook is neutral.
EUR/USD – A Break Higher ?
On EUR/USD we did’nt get the sell off I anticipated yesterday.
Instead, the USD unemployment claims which came out earlier today has set the market on a run higher which may have the capability to continue throughout tomorrow.
If the move higher does materialize I would expect the market to stall somewhat at the 1.0962 resistance. This resistance falls inline with the tops of the wicks found on the candlesticks which make up the upper boundary of this current consolation. Had professional traders sold when the market was here before, there is a chance they may want to sell again to add to their existing sell positions.
Regarding next week I’m kind of caught as to which direction the market will break ?
On one had I feel the move higher today has confirmed that we are in store for more upside movement, possibly to the 1.13400 area which is inline with the highs of the larger consolidation EUR/USD is currently in. On the other hand because the market is at the highs of the current consolidation I feel as though there is still the chance of sellers coming into the market and pushing the market lower.
Coming into tomorrow I would keep an eye on the demand zone marked above the current low, if this low gets broken it would suggest the market will move lower. However, for the low to get broken, the market must first breach the demand zone.
This could be a decent buy setup provided we see a significant bullish engulfing candle manifest when the market enters the zone.
AUD/USD – Advances Higher
Moving forward we also saw another move up take place on AUD/USD.
Today’s move higher was enough to break the high put in place yesterday. Although we are currently seeing some selling enter the market I would likely presume this is caused by profit taking from the traders who were long before the up-move began. Whilst there wasn’t really any opportunity to make money from yesterdays up move, today we did get a bullish pin bar setup present itself just above yesterdays low.
My main focus for tomorrow will be the demand zone marked on the image.
This zone is the first barrier the market must break in order to proceed lower. If the market runs into the zone tomorrow I’ll be watching closely to see if any price action signals appear on the lower time-frames.