Market Commentary 10/02/16

EUR/USD – Stop Hunt

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The support level marked in my last post was slightly off by a few pips, this was confirmed by the bullish pin bar seen with the x below it, it didn’t really matter though as had you taken this pin bar trade its likely you would have lost money.

In addition to this I mentioned how the demand zone marked in the image would not be enough to push the market back above the high of the bearish pin bar, it did produce a small move up, but only managed to reach the close of the bearish pin bar before falling lower.

The one trading opportunity you could have taken was the stop run at the 1.12000 level.

Traders could have been mistaken that the up move today was caused by the demand zone found at the 1.11732 level, one look at Oandas open orders graph proves this is not the case.

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On the graph above I have marked the two primary locations where a high percentage of sell stops were found in the market.

We can see there was a large concentration of stops at the 1.12000 level and the 1.11500 – 1.11600 price range.

When the market fell into these stops professional traders brought, causing the market to advance higher.

The best entry into this trade was the bullish pin bar seen on the 15 minute chart.

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Notice how the market did not turn when it hit the stops at the 1.12000 level, this is because the professional traders had more buy orders to fill, the only way they could fill the rest of these orders was if they pushed the market lower into the second set of stops at the 1.16000 level.

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For tomorrow I expect the market to continue its run higher, if it manages to break the current swing high marked with an arrow, I dont think it will be able to move much further past this point. The swing highs which make up the highs of the consolidation are not far away, there will be a pullback when the market reaches these highs, as far as trading opportunities are concerned I would focus on looking for trades around the support level marked on the image, this support has confluence with a demand zone seen on the 15 minute chart, if we see a bullish engulfing candle develop around here it could end up being a decent trade.


USD/JPY – Continues To Fall Lower

Trading opportunities were limited on USD/JPY today.

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From the image above we can see there was another swing up after yesterdays downmove, whilst it was my belief the market would continue consolidating in between the support and resistance levels, after the market broke through the support level earlier today I think another small move lower is upon us.

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Tomorrow I would concentrate on looking for trades around the support turned resistance level the market broke earlier today, Oanda open order graph isn’t really showing anything meaningful at the movement, all we have is a few scattered stop losses around the  114.200 level, these stops happen to coincide with the resistance level marked on the image, if we see an engulfing candle appear around this point tomorrow it may end up being a high probability trade.


AUD/USD – Still Not Sure


The large bullish pin bar setup observed on the daily chart yesterday has managed to move the market a little higher, although we haven’t really seen any strong movement come into the market as of yet.

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One interesting thing I’ve noticed is how the two bullish pins marked on the image seem to be reacting off the close of the daily pin bar we saw yesterday, I think this warrants further investigation, I have never really studied how the market reacts around the open and closes of different candlesticks, it could make for some interesting trading strategies, if anybody has studied this more extensively let me know of your findings in the comment section below.

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Tomorrow I’ll be monitoring the current low and high put in place today, a break above the high  would suggest further upside which is what I’m expecting, a break below the low however, would indicate to me the market is about to fall lower, possibly to the halfway point of the wick on the bullish pin bar, for now if you’re in the bullish pin setup, I think it would be wise to decrease the distance of your stop from entry, if the market break the high tomorrow, I believe you could be in store for a pretty profitable trade.



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