DAILY REVIEW 23 January 2015

Background: The ECB meeting decision on the scale (EUR1.1 Trillion) and manner of the QE implementation yesterday signals impending Fundamental changes to the market structure for at least a few years. This is different from simply trading the periodic economic releases. The size of the QE program caused an initial drop that was immediately retraced on the decentralization comments where SM got rid of all weak shorts and exited long positions. It was downhill all the way from there for the Euro. The stinker in it is that Draghi says that the ECB will even buy bonds with negative yield. This is really a sign of the times, of an "all or nothing" attempt to reverse the economic slide in Europe. The US dollar was further strengthened by the Canadian central bank's decision to cut the interest rate by 25 basis points, sending the USDCAD sky rocketing as it is another fundamental change that was deemed necessary in the wake of falling oil prices, amongst other concerns. More volatility can be expected in the lead up to Sunday's Greek election.

EU Analysis:

EU: Perspective: Price has closed below the weekly/daily 1.1376 pivot and does not have any significant demand level till the 1.1000 - 1.0762 pivot potential demand level. Bias is strongly down. Possible retracement short levels will be around the previous breakout levels. Daily- The candle is a ultralarge spread (335pips) bear closing near the low on very high vol>4days. The candle close and volume suggests more downside.   
Levels of interest: Demand: Daily/Weekly:  1.1000, 1.0762  

As I write, price has already crashed through 1.1300 Based on the Oanda order book, there are no significant supply or demand levels as most retail traders have been washed out by the price action yesterday. With the bulk of orders sitting at the 1.1370 level and price has pushed 1.1257 at the moment. SM is likely to push to around the 1.1250 level or slightly lower to trap shorts before reversing back up to reload at the 1.1350 -1.1370 level or higher before resuming the downtrend.

EU long levels: 1.1510, 1.1490, 1.1458, 1.0762

EU short levels: 1.1375, 1.1400, 1.1450, 1.1500


GU Analysis:

GU: Perspective: GU has dropped on USD strength amd headed to test the 1.4812 pivot. A potential corrective move level. Day- The candle is a ultralarge spread (240pips) bear closing near the low on very high vol>3days. 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 

Prices have pushed lower and  with the wash and rinse, there are no significant supply order stacks in the Oanda order book, save for some small demand at 1.4950-60, 1.4920-30, 1.4900 SM is likely to maintain selling pressure to 1.4950 or lower before reversing to fade weak longs.

GU long levels: 1.4950, 1.4930, 1.4870, 1.4812 

GU short levels: 1.5050, 1.5100, 1.5150, 1.5200

Posted at 4.20 am EST