Market Commentary 08/02/16

EUR/USD – Moving Higher From Demand

In my last post I mentioned how the demand zone on EUR/USD may provide a good trade entry if the market manages to return to it.

Aviary Photo_130994296977682714

Today we saw the market return to the zone and go on a run higher.

While the market did produce a bullish engulfing candle on the 1 hour chart after the market had spiked into the zone, a better entry could be found on the 5 minute chart.

Aviary Photo_130994298206413632

Here’s how things looked on the 5 minute chart.

We can see as the market entered into the demand zone it produced a bullish engulfing candle, usually I prefer it when the market drops deep into a zone and then produces a signal but I was confident this zone was going to hold and the market was going to rise immediately.

The outlook for tomorrow is one of more upside, hopefully we’ll see a break above the swing high marked in the first image. A break above here would increase the chances of the market running back up to the supply zone found at the 1.13230 level on the daily chart.

 

USD/JPY – Falls Lower From Supply

After a small move up last night USD/JPY ended up falling for the majority of today.

Aviary Photo_130994308732757208

The move up was engulfed just before the market reached the resistance level I suggested you look for trade entry in the previous post.

We can see the resistance level is located above a small supply zone, I tend to shy away from trading supply and demand zones like this, in common supply and demand teachings these zones are refereed to as “drop base drop” levels, these zones are typically created by professional traders taking profits, rather than placing trades as is the case with the “drop base rally”, “rally base drop” zones.

Because they’re caused by traders taking profits rather an actually paling trades their success rate is not great, the zones which are created from the market changing from an up-trend to downtrend or from a downtrend to uptrend have a much higher probability of working out successfully.

Aviary Photo_130994336015571554

Whilst its hard to gauge where the market is next going to encounter enough resistance to cause a pullback  I do believe a small retracement will occur soon, possibly large enough to push the market back up to the resistance level I’ve marked on the image.

This resistance level also happens to fall in line with the supply zone created earlier today, if we do see a pullback take place within the next 24 hours this supply zone may be a good place to look for a short trade.

 

AUD/USD Profit Taking ?

After a significant down-move last week today we have seen some buying begin to enter the market.

Aviary Photo_130994324518456110

The retracement which began last Friday was engulfed lower this morning which created a supply zone on the 1 hour chart.

The move lower began quite strongly with two bearish large range candles making up the majority of the downside movement, the market looked likely to continue lower down into the demand zone at the 0.70200 level, last Fridays low was broken but instead of the market falling it began moving higher.

We could see the market enter the zone tonight in which case watch closely for bearish price action, preferably a bearish engulfing candle would be ideal for a trade entry, if we see a bearish pin bar make sure the market has dropped lower on the next candle before taking the trade, this way you’ll be able to confirm the pin bar has been caused by professional traders selling rather than profit taking confirm

 

You May Also Like:

Leave a Reply

Your email address will not be published. Required fields are marked *