Market Commentary 27/04/16

EUR/USD – Supply Zone Hit, No New Low

In my last post I said to keep an eye on the 15 minute supply zone which formed when the move higher was engulfed by a bearish candle, we have seen this supply get hit earlier today but no new low has been made and the current momentum is still to the upside.

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The move into the supply zone also happened to create a demand zone, when the price dropped after hitting the supply it fell into this demand zone and a sharp rebound higher took place. If this move higher can break above the swing high marked in the image its my guess the market should be able to reach the zone where the bank traders have sold previously.

If they want to sell here again it could be an opportunity to get short in the market, for now just be on the look out for a break of the high, if the high does end up being broken the two highs can be marked as a breakout zone in which we could look for a small long trade if it gets retested by the market.


USD/JPY – Sell Stops Building At The 111.000 Level

USD/JPY managed to make a new high which suggests short-term momentum is up but a fall earlier today has made a lower high form which means the current momentum may have stalled.

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The small move up which occurred at the open of the European session seems to have made a large number of retail traders place buy trades, I think these traders believed the move was a retracement to the up-move we saw yesterday and thought another move higher was going to take place which would break the new high.

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Looking at the open orders graph confirms this was the case.

You can see how there is a collection of sell stops building are the 111.000 level, if we see a move down into these stops it may signal the end of the current move lower and push the price back above the new high, the banks may use these stops to get more buy trades placed instead of having the market return to the demand zone which we know formed due to them placing buy trades.

If the market runs into these stops tonight it may occur towards the end of the NY trading session around 7:00pm – 10:00pm by this time the activity in the market will have died down considerably and it will be easy for the banks to cause a price change by placing small trades. In other words, they can make the market drop into these stops using very little money and get their buy trades placed before the end of their trading session.


AUD/USD – Huge Movement Lower After CPI News

All AUD crosses suffered big losses last night when the CPI news came out worse than expected.

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The demand zone which I marked yesterday was wiped out completely with no reaction taking place at all and also the daily demand zone which we have been anticipating a drop into has been broken.

Now the momentum is firmly to the downside the trades we want to be placing are sells, at the moment there isn’t really any place to look for short trades but I feel like a retracement will take place soon which may create some levels we can use to look for opportunities to sell, we have started to see some signs of profit taking entering the market with the tiny pauses I’ve marked with arrows in the image, this could be an indication of the recetracment taking place sooner rather than later.

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