DAILY REVIEW 25 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 near-normal spread (198pips) bear closing near the low on low vol<2weeks. The candle close suggests more downside. 

DAY- The candle is a below average spread (87pips) bear closing near the low on low vol<2days. The candle close suggests more downside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: 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:  1.0677-1.0660, 1.0639-1.0612
Potential short (trapped) stops: 1.0896-1.0930, 1.100-1.1017, 1.1026-1.1040, 1.1095-1.1112 

Prices look to be holding even with the poor German data and business climate index out earlier, possibly waiting for Draghi's speech to make the final move. With the bunch of volume still trapped short, SM is likely to fade them to around the 1.0865 level or higher before reversing.

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

EU short levels: 1.0865, 1.0915-1.0927, 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 (282pips) bull "near doji" closing 2/3 off the low on high vol>20weeks. The candle close and volume suggests buying.
DAY- The candle is a large spread (157pips) bull pseudo "upthrust" closing on low vol<2days. The candle close and volume suggest reduced buying interest. 

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 but also new trapped long volumes.

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

Potential long (trapped) stops:  1.4079-1.4064 (small vol)

Potential short (trapped) stops: 1.4318-1.4385, 1.4412-1.4428, 1.4696-1.4712

The volumes are actually very thin and I would advise caution. SM is likely to remove the weak longs by testing the 1.4200 key level or lower before reversing to continue the retrace.

GU long levels:  1.4100

GU short levels: 1.4360, 1.4425, 1.4512, 1.4535, 1.4600

Posted at 7.01 am EST