DAILY REVIEW 7 January 2015

EU Analysis:

EU: Daily- The candle is a normal spread (84pips) bear closing at the low on high vol<1day daily bullish divergence. The candle close and volume suggests more downside.  
Levels of interest: Demand: Daily/Weekly:  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 spiked through the 1.1865 low to 1.1839 in Asia as SM took stops below the pivot low, probably setting up positions prior to the FOMC later at 3pm EST. There is a large volume of traders trapped short below the 1.1900 level. Based on the order book, possible short take profits are at 1.1835-45 and possible long take profits at 1.2000 There are no significant orders stacks. SM is likely to create selling pressure to test the current low at 1.1839 or lower and then reverse to remove weak shorts upto the 1.200 level or higher in a "corrective" move to re-accumulate short positions. Any long position is counter-trend and "corrective" as the technical trend is still down.

EU long levels: 1.1839, 1.1800, 1.1780, 1.1725, 1.1639

EU short levels: 1.2025, 1.2150, 1.2205, 1.2260, 1.2300


GU Analysis:

GU: Day- The candle is a large spread (132pips) bear closing at the low on low vol<2days with continuing bullish volume divergence. 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 continued USD strength pre-FOMC and uncertainty over the economy coupled with the looming election in May continues the sell-off of GBP. The UK's Prime Minister, David Cameron will also have to grapple with the EU referendum where he seeks to restrict the impact of EU's workers' freedom of movement laws in the UK.  

Prices tanked in early Asia on USD strength making a new low at 1.5105 before fading weak shorts. With the FOMC later today, SM will likely position prices against the intended direction at structure levels prior to the news release. SM is likely to create selling pressure to test the 1.5100 key level or lower before moving back up to reload short positions. There are no significant supply order stacks but possibly some at 1.5090 - 1.5100 and 1.4990 - 1.5000

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

GU short levels: 1.5400, 1.5470, 1.5500, 1.5540, 1.5600

Posted at 4.00 am EST