Tuesday, 6 January 2015

DAILY REVIEW 6 January 2015

EU Analysis:



EU: Daily- The candle is a normal spread (89pips) bear closing almost 1/2 off the low on very high vol>9days. The candle close and volume suggests more upside. 
Levels of interest: Demand: Daily/Weekly:  1.1875, 1.1639 Supply: short-term: 1.2150, 1.2205, 1.2260, 1.2300, 1.2356, 1.2375, 1.2425, 1.2500, 1.2530, 1.2600 

Background: The Euro remains weak and there is no clear remedy to the problems yet. With Greece, UK both have general elections coming up, volatility will come from news releases. 

Prices actually spiked through the 1.1875 to 1.1865 yesterday before SM started to fade the weak shorts. With the large volume of traders trapped short now, SM is likely to continue to fade the weak shorts and take possible stops at the 1.1970-80 level or higher before reversing down to test the 1.1886 pivot. Any long position is counter-trend and "corrective" as the technical trend is still down.

EU long levels: 1.1900, 1.1886
EU short levels: 1.2150, 1.2205, 1.2260, 1.2300


GU Analysis:



GU: Day- The candle is a normal spread (116pips) bear closing about 1/4 off the low on average vol>6days. 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 combination of USD strength and uncertainty over the economy coupled with the looming election in May have contributed to the sell-off of GBP. Furthermore, UK's David Cameron will also have to grapple with the EU referendum in which he intends to restrict the impact of EU's workers' freedom of movement laws in the UK.  

Prices are still in the "inside day" of yesterday's range. There is a significant bunch of traders trapped short and SM is likely to fade these weak shorts to 1.5400 or higher to 1.5460 where it looks like a lot of stops are located before reversing to continue the downtrend. We can reasonably expect SM to use the Services news coming out at 5.30pm to position prices these levels for the move.

GU long levels: 1.4870, 1.4812 
GU short levels: 1.5400, 1.5470, 1.5500, 1.5540, 1.5600

Posted at 0.30 am EST

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