Market Commentary 30/06/16

EUR/USD – Possible Reversal In Play

After making another new high a couple of hours ago the price of EUR/USD is now falling and we might be seeing the start of a move lower.

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You can see how after making a new high selling started to enter the market in the form of bearish engulfing candles. These engulfs could be the banks placing sell trades, for this to be confirmed we need to see the market break the low which I’ve marked in the image. A break below here would signal further downside movement and would also mean the supply zone which I’ve drawn from the bearish engulf that appeared earlier will become valid for looking for trades.


USD/JPY – Failing To Break New Highs

Currently we are seeing USD/JPY fail to break past the highs made yesterday after hitting the stops which had built up near the swing high.

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The buy stops which built up above the swing high ended up being hit and managed to cause a slight move lower. The move lower seems to have caused a large number of traders to enter short trades as evidenced by the fact that a large percentage of sell stops have accumulated above the swing high marked with an X.

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On the open orders graph we can see how a high number of buy stops have built up just above the 103.00 level. This level is right above the swing high which I marked, the traders who’s stops these are must have thought the swing high was a good place to put their stop when the market was falling.

If we see the market come back up here watch for a pin bar or engulfing candle to form after the stops have been hit. The banks might be placing sell trade around these highs in anticipation of a move lower taking place, if this is the case then the banks will use the buy stops to get lots of sell trades placed at one price.


AUD/USD – Banks Possibly Placing Buy Trades

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The 4 points where I’ve marked the X’s are placed where the banks could have placed buy trades. The low which I’ve marked with the black line is a location we need to be focusing on because it’s the most recent point where the banks might have placed buy trades into the market. If the market falls and breaks below this low it would tell us the banks have not been placing buy trades at the points which I’ve marked.

The reason why is because if the banks have placed a buy trade at the low they will not want the price to break past it as it would mean their profitable buy trade would turn into a loser which they would have to liquidate. Of course the banks don’t want this to happen and will come into the market and place more buy trades if they have indeed placed a buy trade at the low which I’ve marked with a line.

For now monitor the market for a break of the current high, a break above here suggests more upside movement and that we should begin looking for entries long.

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