DAILY REVIEW 19 January 2015

Overall Background: The shockwaves created by the explosion of the SNB bombshell last week will continue to reverberate through this week and over the coming months as the market will reassess and reposition itself accordingly as the EURCHF now becomes more tradeable again. One must remember that prior to the SNB intervention, the CHF was a safe haven currency.

EU Analysis:

EU: Weekly- The candle is a large spread (411pips) bear closing off the low on ultrahigh vol>170days. The candle close and volume suggests more downside. Daily- The candle is a very large spread  (189pips) bear closing half off the low on very high vol<1 day. The candle close and volume suggests more downside.  
Levels of interest: Demand: Daily/Weekly:  1.1376, 1.0762  

Background: The Euro remains weak. Both Greece and the UK both have general elections coming up, volatility will come from news releases. In an interview with Tiroler, ECB's Nowotny said that their policy options are limited. The tapebomb by the SNB last week has likely resulted in not just stops being triggered but also adds more pressure to the Euro as now, the CHF is also able to be free traded against it. Fundamentally, it means that the CHF becomes an attractive alternative as compared to the Euro. Any long position is counter-trend and "corrective" as the technical trend is still down.
Prices made a new low at 1.1458 last Friday. The next significant possible demand level is weekly level at 1.1376 and after that, 1.0762 Based on the Oanda order book, trapped shorts exist from 1.1550. Possible fresh "demand" can be seen 1.1510-1.1520 and 1.1490-1.5000 Both the weekly and daily close suggests profit taking/buying into the down move. In the absence of high impact news today, SM is likely to continue creating selling pressure to around the 1.1500 key level or lower before reversing to retest the previous pivot 1.1639 or higher before resuming the downward move.

EU long levels: 1.1510, 1.1490, 1.1458, 1.0762

EU short levels: 1.1650, 1.1722, 1.1790, 1.1850


GU Analysis:

GU: Weekly- The candle is a below average spread (194pips) bear small body spinning top closing on ultrahigh vol>historical tick vol data.  Futures show vol>12weeks. The candle close and volume suggests more downside. Day- The candle is a very large spread (160pips) bear spinning top closing on very high vol<1day. The candle close and volume suggests more downside. 

Demand: Weekly/Daily:  1.4870 - 1.4812, 1.4229 Supply: Short term: 1.5400, 1.5470, 1.5500, 1.5540, 1.5600 

Background: The potential lack of continuity in the UK leadership with forthcoming elections and the poor economic performance continue to weigh heavily on the GBP. Furthermore, it was also undermined by the SNB decision.

From the order book, there are possible short stops located around 1.5270, 1.5300 and possible long stops from around 1.5000 - 1.5030 There are no significant supply order stacks but possibly some at 1.5400 and 1.5500 SM is likely to create selling pressure to the 1.5100 level or lower before reversing for a "corrective" move upward.

GU long levels: 1.5100, 1.5030, 1.5000, 1.4938, 1.4870, 1.4812 

GU short levels: 1.5270, 1.5300, 1.5345, 1.5400, 1.5470, 1.5500, 1.5540, 1.5600

Posted at 2.48 am EST