DAILY REVIEW 11 February 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 and January's candle is an "inside" of the December candle. 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 small range (274pips) bear spinning top closing on low vol<1month. The candle close and volume suggests no selling pressure. 

WEEK- The candle is an above average spread (431pips) bull closing off the high on high vol>6weeks. The candle close and volume suggests more upside.  

DAY- The candle is a very large spread (151pips) dragonfly doji closing on very high vol>116days. The candle close and volume suggests absorption of sellers and more upside.

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 shows net trapped short volumes and new trapped long volumes. 

Potential demand stacks:  1.1265-1.1225, 1.0951-1.0932

Potential supply stacks: 1.1430-1.1450

Potential long (trapped) stops:  1.1140-1.1045
Potential short (trapped) stops: 1.1351-1.1362, 1.1403-1.1415 

Yesterday, FED Chair Janet Yellen testimony before the Joint Economic Committee was that the FED would be staying the course, without any significant change. She will testify again later today and will be today's catalyst for SM to move. Yesterday I wrote "SM is likely to fade the newly trapped weak longs to around 1.1250 or lower before reversing to continue northbound", they reached 1.1160 and turned. SM is likely to test 1.1350 or higher before reversing.

EU long levels: 1.1220, 1.1200  

EU short levels: 1.1360, 1.1400-1.1410, 1.1421-1.1430

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 an above average (736pips) bear closing about 1/4 off the low on low vol>4months. The candle close and volume suggests more downside.

WEEK- The candle is a large spread (440pips) bull closing about 1/3 off the high on very high vol>22days. The candle close and volume suggests more upside.
DAY- The candle is a below average spread (139pips) bull spinning top closing on very high vol>117days. The candle close and volume suggests more upside.  

Demand: Weekly/Daily:  1.3705-1.3500 Supply: Short term: 1.5574, 1.5600, 1.5619 

The Oanda order book: there are about equal newly trapped long volumes and profitable long volumes that are significant.

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

Potential long (trapped) stops:  1.4460-1.4385, 1.4344-1.4309, 1.4152-1.4109

Potential short (trapped) stops: 1.4664-1.4736, 1.4820-1.4840, 1.4868-1.4887

The manufacturing data release yesterday was a bummer whereas the NIESR GDP estimates was bullish. There is no significant UK news today so we can expect SM to oscillate to fade weak longs to 1.4450 level or lower before reversing.

GU long levels:  1.4455-1.4438, 1.4420-1.4395, 1.4360

GU short levels: 1.4550-1.4565, 1.4665-1.4680, 1.4700, 1.4732, 1.4800-1.4815

Posted at 1.44 am EST