DAILY REVIEW 23 October 2015

EU Analysis:

EU: Perspective: Price has tested and broken through the 1.0500 which is simply a monthly low and psychological level with the next pyschological level at 1.0000 and the 0.9900 level being the breakout retest of a reaccumulation structure. Bias is still strongly down from a market structure perspective.    

MONTH- The candle is a small spread (372pips) bear closing 1/4 off the low on low vol<1month. The candle close and volume suggests no selling pressure. 

WEEK- The candle is a below average spread (160pips) bear pseudo-upthrust closing on low vol<40weeks. The candle close and volume suggests no buying pressure. 

DAY- The candle is a ultralarge spread (250pips) bear closing at the low on very high vol>13days. The candle close and volume suggests more downside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: The last NFP data coupled with the recent dovish FOMC meeting still makes for a less than appealing Dollar long bias. It is likely that prices will retest the previous monthly pivot breakout level of 1.1640 or higher as short stops to 1.1711 have largely been cleared out and it will take firm fundamental policy change such as an interest rate decision such as a USD rate hike to push EURUSD all the way back down again, that is not likely till the next FOMC meeting 27-28 Oct, a great opportunity for SM to build short positions prior to the expected tightening. 

The Oanda order book shows a bias in net trapped long position volumes. 

Potential demand stacks:  1.0944-1.0930, 1.0905-1.0895

Potential supply stacks: 1.1145-1.1160, 1.1193-1.1204, 1.1292-1.1302

Potential long (trapped) stops:  1.1087-1.1034, 1.1008-1.0985

Potential short (trapped) stops: no significant stacks

Thanks to Mario Draghi butchering the Euro, we have a huge fall in EU based on fundamentals i.e potential policy shift etc. which is quite different from the normal news data releases, the effects of which are going to linger at least until next week when it will be the FED's turn to kick the ball. SM is likely to the day low 1.1070 or lower before reversing. From a technical perspective, price has not broken the daily trendline yet and still contained in a triangle squeeze upwards which could results in technical traders coming in given the right conditions thus creating demand.  

EU long levels: 1.1070, 1.1020-1.1015

EU short levels: 1.1150, 1.1195-1.1200, 1.1315-1.1320  


GU Analysis:

GU: Perspective: GU has closed below June's low 1.5169 and looks headed toward  the current monthly pivot 1.4564 as the next possible level of support/demand. The June close of 1.5701 becomes important as a supply level to overcome for higher prices.  

MONTH-  The candle is a below average spread (551pips) bear closing near the low on low vol<12months. The candle close and volume suggests no selling pressure. The candle close suggests more downside.

WEEK- The candle is a normal spread (308pips) bull closing 1/4 off the high on low vol<1week. The candle close and volume suggests more upside.
DAY- The candle is a large spread (140pips) bear upthrust closing on vol>4days. The candle close and volume suggests more downside. 

Demand: Weekly/Daily:  1.4870 - 1.4812, 1.4229 Supply: Short term: 1.5574, 1.5600, 1.5619 

The Oanda order book shows thin volume with more trapped short volume. 

Potential demand stacks: 1.5225-1.5187
Potential supply stacks: 1.5700-1.5710

Potential long (trapped) stops:  1.5391-1.5380, 1.5368-1.5354, 1.5322-1.5305, 1.5288-1.5278

Potential short (trapped) stops:  1.5418-1.5433, 1.5455-1.5468, 1.5522-1.5533, 1.5585-1.5653

The cable was slaughtered yesterday despite earlier gains from good data owing to Draghi's actions. SM is likely to maintain buying pressure to retest 1.5414 or higher before reversing. 

GU long levels:  1.5367-1.5360, 1.5300, 1.5214, 1.5200-1.5195

GU short levels: 1.5457, 1.5475-1.5485, 1.5522-1.5533, 1.5608, 1.5637, 1.5653

Posted at 6.30 am EST