Market Commentary 01/02/16



USD/JPY – WTF Was That ?


Last Friday the Bank Of Japan came out and said they were going to begin implementing negative interest rates.

Needless to say this had a dramatic effect on all of the JPY crosses.

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You may remember on Thursdays post I closed my bullish pin bar trade for a 50 pip profit when the market started showing signs of stalling.

Unfortunately as you can tell I ended up closing the trade at the wrong time, had I left the trade open into Friday night, right now I would be sitting on a 271 pip profit.

It’s probably fair to say most traders, when faced with a similar situation would be feeling pretty frustrated had they just taken profits before an up-move like that occurred.

However I’m not.

You see if I was to feel frustrated or angry by missing out on what would have been a large profit, my trading today would have suffered.

Each trading related decision you make can only be made with the information you currently have available. When I closed my USD/JPY trade I did it using the information that was available to me at that time, there was no way for me to know beforehand what The Bank Of Japan was going to announce ! They could have easily come out and announced positive interest rates which would have made the market decline significantly, this would have likely resulted in me not coming out with any profits.

Its better to come out with something than come out with nothing.

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Today was a pretty quite day for USD/JPY, the only real movement we saw was when the market dropped at 3:00 this afternoon. Currently the market is in a small downtrend as evidenced by the lower low made earlier today. Whilst I think it’s unlikely for the market to suddenly develop into a down-trend, for now I would wait until a new high gets made before placing any more buy trades.

I would watch the level marked on the image for signs of another move up.

EUR/USD – Sell Off At The Consolidation Highs

In my last post I discussed how EUR/USD may fall this week as it was approaching upper boundary of the consolidation. Due to the surprise announcement by the Bank Of Japan to switch to negative interest rates,, the drop I assumed would happen this week actually ended up happening on Friday.

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The demand zone I marked last week ended up being breached by the Bank Of Japan announcement, the spike into the zone and the failure to move higher on the next candle was a sure sign the market was getting ready to continue dropping lower.

What I’m looking for tomorrow is a move down from the current price of 1.08877. Ideally I want this down-move to contain multiple bearish large range candles, hopefully creating a supply zone in the process. If we do see this, I would expect the market to reach the lows of today’s up-move.


AUD/USD – Bearish Pin Bar Into Bullish Pin Bar

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When the market closed last Friday it produced a bearish pin bar seen on the daily chart.

Today we saw the market decline a little before recovering enough to turn the daily candle a bullish pin bar.

I’m not convinced today’s bullish pin will push the market higher. Looking at the chart below we can see the recovery has not been a strong one, by this I mean instead of seeing a thrust up creating the pin we have got a slow grind higher, on top of this we have the RBA rate announcement coming out 3:30 tonight.

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Although the interest rate statement is expected to remain the same, the possibility remains it could cause some volatility.

The point of interest for me tomorrow will be the supply zone marked on the image, although this zone does not meet the criteria for trading supply and demand zones I laid out in this article, it is the place where sellers last came into the market creating the bearish pin bar. If the intention of these sellers was to sell expecting the market to go down its likely they will want to sell again when the market returns to this point, if it was profit taking which created the pin, I would assume the market will stall slightly at the supply zone before continuing higher.



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