DAILY REVIEW 21 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 below average soread (179pips) doji closing on high vol<1week. The candle close and volume suggests selling absorption and more upside. 

DAY- The candle is a normal spread (98pips) bear upthrust closing on high vol>2days. The candle close and volume 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. Tumbling oil prices with the expected additional supply of Iranian oil also creates further uncertainty.

The Oanda order book still shows a majority of net trapped short positions volumes. 

Potential demand stacks:  N.A.

Potential supply stacks: N.A.

Potential long (trapped) stops:  1.0860-1.0850 
Potential short (trapped) stops: 1.0981-1.0990, 1.1095-1.1112 

We have the Euro interest rate decision as well as the ECB Press Conference today. SM is likely to remove as many weak shorts as possible by retesting yesterday's high 1.0974 or higher before reversing.

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

EU short levels: 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 (352pips) bear closing at the low on high vol<1week. The candle close and volume suggests more downside.
DAY- The candle is near normal spread (94pips) bull spinning top closing on high vol>30days. The candle close and volume suggests buying. 

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

The Oanda order book shows more trapped shorts with a build up in volume.

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

Potential long (trapped) stops:  1.4122-1.4090 (significant volume only)

Potential short (trapped) stops: 1.4220-1.4230, 1.4335-1.4375, 1.4696-1.4712

Prices went right through "potential demand", this is why we must wait to see what the price-volume tells us. Anyway, SM may position prices ahead of key UK data tomorrow. Price is at a level where SM may induce shorts before pulling back upward for the retrace. SM is likely to retest yesterday's low at 1.4123 or lower before reversing. In the event of a retracement, we can see net stops all the way upwards.

GU long levels:  1.4123, 1.4100

GU short levels: 1.4330, 1.4425, 1.4512, 1.4535, 1.4600

Posted at 11.30 pm EST