DAILY REVIEW 12 January 2016


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. December's candle suggests a retracement is in progress. We also note that there are no significant orders/ stops lower until the 1.0000 key level. Bias is still strongly down from a market structure perspective.    

MONTH- The candle is a below average spread (541pips) bull closing 1/3 off the high on low vol>2months. The candle close and volume suggests more upside. 

WEEK- The candle is a normal spread (236pips) bull "hammer" closing on high vol>2weeks. The candle close and volume suggest buying. 

DAY- The candle is a normal spread (122pips) bear closing near the low on high vol<3days. The candle close suggests more downside. 

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: The markets as a whole were thrown into a turmoil with uncertainty owing to China's actions in devaluing the Chinese Yuan and consequent stock market downward spiral. The market will most likely have to wait for the next major impact data release which is the NFP out this Friday before it can establish a clear direction.

The Oanda order book shows a significant volume of net trapped short positions. 

Potential demand stacks:  1.0800-1.0789, 1.0700-1.0690, 1.0677-1.0664

Potential supply stacks: N.A.

Potential long (trapped) stops:  N.A. 
Potential short (trapped) stops: 1.0922-1.0930, 1.0968-1.0993, 1.1010-1.1018, 1.1027-1.1040, 1.1090-1.1100, 1.1120-1.1130 

Without any significant data release or news events today, SM is likely to induce shorts to 1.0840 or lower and then reverse upward to take stops around Friday's high 1.0969  or higher before reversing. 

EU long levels: 1.0800-1.0795, 1.0762-1.0740, 1.0700  

EU short levels: 1.0970, 1.0983-1.1000, 1.1060, 1.1105, 1.1208

Posted at 7.34 am EST