DAILY REVIEW 13 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 below average spread "near doji" closing on low vol<4days. The candle close and volume suggest reduced selling pressure.

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 majority of net trapped short positions volumes. 

Potential demand stacks:  1.0800-1.0789, 1.0700-1.0690, 1.0677-1.0664, 1.0608-1.0595

Potential supply stacks: N.A.

Potential long (trapped) stops:  N.A. 
Potential short (trapped) stops: 1.0833-1.0844, 1.0900-1.0920, 1.0967-1.0977, 1.1094-1.1102 

Yesterday, I wrote "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". It looks like this movement is still very much in progress. SM is likely to test the 1.0800 key level or lower before reversing to take stops above.

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


GU Analysis:

GU: Perspective: GU has closed below April pivot 1.4564. The June close of 1.5701 becomes important as a supply level to overcome for higher prices. The downward bias is still dominant. 

MONTH-  The candle is a below average spread (507pips) bear closing at the low on low vol>1month. The candle close and volume suggests more downside.

WEEK- The candle is an above average spread (309pips) bear closing near the low on high vol>18weeks. The candle close and volume suggests more downside.
DAY- The candle is an ultra-large spread (208pips) bear closing nearly 1/2 off the low on high vol>1day. The candle close suggests fading of weak shorts prior to more downward movement.

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

The Oanda order book shows extremely thin overall volumes with newly trapped shorts in the majority. 

Potential demand stacks: Not significant
Potential supply stacks: Not significant

Potential long (trapped) stops:  1.4200-1.4190, 1.4158-1.4122, 1.4075-1.4060

Potential short (trapped) stops: 1.4470-1.4482, 1.4530-1.4562, 1.4600-1.4620

With the UK interest rat decision due tomorrow, SM is likely to fade weak shorts up to around the 1.4500 key level or higher before reversing. 

GU long levels:  not applicable

GU short levels: 1.4500, 1.4535, 1.4600

Posted at 6.18 am EST