Market Commentary 21/03/16

EUR/USD – Still Pulling Back – Approaching 1 Hour Demand Zone


The profit taking which began last Friday is still progress, the market is now getting close to the demand zone on the 1 hour chart.

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There has been some signs of buying entering the market in form of an up-move earlier today. The two bullish candlesticks which form this upmove are bigger in size than the bullish candles seen in the previous up-moves. This could be a sign of weakness in the market and an indication the institutions have started placing buy trades in anticipation of another move up.

At the moment the market is reacting to the demand zone created by the upmove this afternoon, if this upmove manages to break the high at the top of the current down-move it would suggest the momentum is changing and the market is getting ready for another move up. If the high doesn’t get broken then the demand zone found below remains our main focus for trading opportunities.


USD/JPY – Moving Closer To 1 Hour Supply


USD/JPY is still moving back to the supply zone formed when the market dropped last week.

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This current move is caused by banks taking profits off their sell trades, when the market made its big move lower last week the banks trades would have been in a major amount of profit, in order for them to secure some of that profit they need other people to buy what they have sold at a worse price, in this case the traders who are buying are the retail traders who have sold late into the downmove, they are being used by the bank traders to take profits off of their own trades.

On top of this we also have a large selection of retail traders believing the pullback is a reversal, these traders are buying with the expectation that the market is going to move higher, if the market runs up into the supply zone and the move consists of large bullish candles alot of additional traders will also begin buying, this will be perfect for the bank traders who wish to place more sell trades in the direction of the current trend.

Over the next couple of days watch the market closely to see if a run up into the supply zone is going to occur, if it does and you see an engulfing candle form get into the trade and see if the market manages to make a new low.


AUD/USD – Old Demand Failed, New Demand Created


The market has broken through the old demand zone seen last week, it has now made a quick surge higher which has created a new demand zone on the 1 hour chart.

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When the market opened late last night the market fell into the zone, a move higher than failed as evidenced by the bearish pin bar marked in the image. From here the market proceed to fall past the zone before stopping and making a sudden move higher. This move high has created its own demand zone which the market has now fallen into.

If the move out the new demand zone fails, watch for another drop into the demand zone just below.

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