Market Commentary 26/05/16

EUR/USD Climbing Higher After Stop Run

When my last post was published EUR/USD had just fell into a collection of sell stops which had accumulated just below the previous recent low.

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We can see the candle which struck the stops in yesterdays stop run caused a bullish pin bar to form and from then on-wards the market advanced higher. Today we have actually seen another stop run take place just a few hour ago.

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On the open orders graph you’ll notice how there was a percentage of sell stops just above the 1.1150 level, when the price fell earlier these stops were hit and market shot up to where it is now.

Going into tomorrow I think we have a good chance of continued up-movement, its probable this retraecement will manage to break the high of the last down-move seen on the daily chart before moving lower so there is the possibility of making a few pips from a long trade if we get chance.


USD/JPY – Supply Zone Not Hit, Price Now Falling Lower

The supply zone which I marked out a couple of days ago as a place where the banks have placed their last sell trades did not end up being hit and instead the price turned and suffered a deep decline over last night.

Aviary Photo_131087485844408437You can see how close the price was to hitting the supply zone, just a few more pips and it would have been hit. With the decline that took place after a new supply zone was created. The market returned to this zone 4 hours ago and another drop ensued.

What we need to watch for now is if the current low gets broken. If it does then I would expect the price to drop more significantly tomorrow and next week. In the event that it doesn’t break and instead the price moves back up again, its likely to be the bank traders taking profits off their sell trades to  cause the price to rise so they can generate more buy orders for them to use to place more sell positions in the direction of the downtrend.

If this is the case watch the high marked with an X. This marks the point where the banks have placed their most recent sell trades, if they want to get more placed by causing a move up they will not want this point to be breached as it would put their positions at a loss at least temporarily that is.


AUD/USD 1 Hour Demand Zone Hit

The two supply zone which AUD/USD ran into yesterday ended up pushing the market lower into the lower demand zone which i said could be a place where the banks decide to take more profits off their sell trades.7

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I’m hesitant to say the demand zone was the reason why the price reversed as it likely there was sell stops located between the 0.71600 – 0.71700 levels although due to the limited information provided about the open orders on AUD/USD I can’t prove this to be the case.

There isn’t really any technical level which are of any significance at the moment, the only level which may be able to give us an entry long is the small demand zone at the 0.71930 level ( not marked on the chart ) If a bullish engulfing candle appears in this zone it may be the beginning of another move higher which will break the new high put in place earlier today.

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