DAILY REVIEW 26 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 large spread (390pips) bear closing just off the low on low vol>1week. The candle close and volume suggests more downside. 

DAY- The candle is a large spread (142pips) bear closing just off the low on very high vol>37days. 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 makes for a less than appealing Dollar long bias. Then last week we had Mario Draghi's butcher's knife applied to the Euro. Structurally, it is still 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 clear FED policy on USD rate hike implementation to push EURUSD to the magical parity level. Given the state of the US data releases blowing hot and cold, it is difficult for the FED to justify such an action. The coming FOMC meeting 27-28 Oct will in current circumstances present a great opportunity for SM to induce shorts on the release before reversing. 

The Oanda order book shows no clear bias on net trapped position volumes. 

Potential demand stacks:  1.1006-1.1099, 1.0905-1.0895

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

Potential long (trapped) stops:  1.0995-1.0955

Potential short (trapped) stops: 1.1044-1.1077

Prices opened slightly gapped down by 10pips but has since been closed.  SM is likely to continue fading weak shorts to the 1.1070 or higher (retest of trendline break confluence) before reversing.   

EU long levels: 1.1000, 1.0975, 1.0958, 1.0948

EU short levels: 1.1070, 1.1090-1.100, 1.1145-1.1150, 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 below average spread (204pips) bear closing at the low on low vol<61weeks. The candle close suggests more downside.
DAY- The candle is a normal spread (113pips) bear closing at the low on average vol<1day. 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 no major bias on trapped short positions. 

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:  1.5372-1.5385, 1.5409-1.5420, 1.5435-1.5443, 1.5522-1.5533, 1.5552-1.5563, 1.5595-1.5646

The cable was slaughtered together with the EU last week. SM is likely to fade weak shorts to 1.5370 or higher before reversing. 

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

GU short levels: 1.5370-1.5385, 1.5408-1.5419, 1.5457, 1.5475-1.5485, 1.5522-1.5533, 1.5608, 1.5637, 1.5653

Posted at 6.59 am EST