Market Commentary 28/04/16

EUR/USD – Potential Bearish Pin Bar On Daily Chart

Last night was eventful for most markets due to the release of the FOMC news, on EUR/USD the candle the news came out on caused an initial spike higher then a large move lower but the price managed to close back near the open of the candle.

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Currently we have selling coming into the market although its difficult for me to distinguish between whether this selling caused by profit taking by bank or by banks placing sell trades. On one hand I feel like it’s the bank selling because they believe the market should fall as the selling is coming in very close to where the banks where selling before, on the other hand I feel like the selling is caused by profit taking by bank who have placed buy trades at the bottom of this whole move up.

I’m not really sure as to which direction the market is now more likely to move in, the weakness seen in USD against the JPY and the resulting drop last night make me feel like EUR/USD now has a better chance of moving higher and continuing its up-trend but at the same time I think it could be equally as likely for the price to drop as the pullback itself has not looked too strong and the selling we have seen since the market stopped trending up has all been at a similar location.

I think the demand zone in the image is a critical point we need to focus on as a break below here would signal more downside momentum and would change my outlook on the market to one of more substantial down-movement. See how the market reacts when It reaches the zone, if a bullish engulfing does appear I’ll be taking the trade to monitor the resulting price action closely, if you decide to take the bearish pin bar trade which is setting up on the daily chart make sure you wait until the end of the day before placing the trade and keep watch on the 1 hour demand to see if we get a large bullish reaction.

 

USD/JPY – Big Move Lower After Monetary Policy Statement

Last night the monetary policy statement came out which caused large moves across all JPY currencies, USD/JPY saw one of the biggest with the price dropping 228 pips at the time of the release.

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It was my belief that what we were seeing before the drop was bank traders taking profits off buy positions, with the drop is seems like this was not the case and what was really going on was bank traders placing sell trades in anticipation of another move lower.

Now the market is back near the lows of the retracement it would think its likely for the price to drop even lower over the course of next week, for most of today we have seen the market retrace against the down-move, this is likely to be profit taking by the banks who placed their sell trades before the drop. When large drops like this occur it can be difficult to find locations to place trades as no recent technical level tend to be created, fortunately we have a supply zone which may provide us with an entry short if the market manages to retrace into it.

 

AUD/USD – Still Pulling Back After Yesterday’s Down-move

The market is still moving higher after the downmove which took place yesterday, there are two possible place where I think this current up-move could end and could cause the price to fall.

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I think its likely for the high created by a move lower earlier today to be broken by the immediate move higher, the problem is determining which point the market has a higher probability of turning at, the lows or the zone where the bank traders have been selling ?

Watch to see how the price action develops tomorrow, I think we’ll see a little more upside before another move lower so keep an eye for signals to short if the price moves into the lows I’ve marked above.

 

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