Market Commentary 29/04/16

EUR/USD – New Highs Being Made

In yesterday’s post I talked about how I was unsure of which direction EUR/USD was likely to move in, today it seems we have our answer with a large swing past the zone which I defined as a place where banks were previously selling.

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The demand zone which I told you to keep an eye on didn’t end up being hit, the price turned 5 pips way from the zone so it was quite unfortunate to not get an entry long from here. The resulting move higher after the market missed the demand eventually broke past the swing high which formed when the price dropped close to the demand zone, when this swing high was broken it formed a breakout zone and we very nearly saw the market fall into the zone on the next retracement.

I thinks its likely for the price to continue advancing at the beginning of next week, we are in close proximity to the swing high of the entire retracement on the daily chart and its probable for this high to be breached looking at the current momentum. For now there isn’t really much to do, ideally we need some profit taking to come into the market in order to give us a few levels which we can use to look for entries long because as it stands I can’t see anything which could present us with a long trade.

 

USD/JPY – Price Has Dropped Below The Pullback Low

Today we have seen another drop lower albeit a much smaller one than what we seen on the 28th, this new drop has managed to brake the low of the pullback which began back on the 11th April, it’s now possible we’ll see continued downside movement over the coming week.

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The supply zone didn’t provide us with a short trade as the retracement failed to move into the zone, the arrows define the points where profit taking has come into the market, there’s a high chance we’ll see more of this as the price continues to decline. The second drop which broke the low of the pullback is likely to have made a large number of retail traders enter short trades, for them the drop represents confirmation of the downtrend continuing so they will be entering short positions at the bottom of each new down-move.

These retail traders will be contributing large numbers of sell orders into the market when they decide to go short, it’s these sell orders which the bank traders will use to take numerous profits off their own sell positions, without these retail traders the banks would not be able to take profits off their trades.

In terms of entries short I would want to see a more substantial retracement take place before trying to get a short trade placed, there may be a supply zone we can use if the candle for this hour ends up closing heavily bearish, if it closes with a small bearish candle or a candle with a wick on it which takes up more than half the candle then I’ll pass on taking a trade at the zone.

AUD/USD – Bearish Pin Bar On the Daily Chart

After a new high was made early this morning we have seen the price fall, this fall has created a bearish pin bar on the daily chart.

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When the new high turned into a bearish pin bar it seemed likely for the market to fall, the run up past the high was not really strong as evidenced by the bull candles being small, also the new high was made around the time of the European session begging which meant it was likely the banks used the buy orders which came into the market overnight to place their own sell trades and trigger a move lower.

If the current candle stays as a bearish engulf then I would think the price has a high chance of breaking the next swing low, which suggests further downside momentum. I’m a little hesitate to take the bearish pin bar trade on the daily chart because 0f how weak this move lower currently is, usually I like to trade daily pin bars which have been created by large moves on the lower time frames, the move down we’re seeing on AUD/USD is not something which I would consider a large move down therefore I may hold off on this one.

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