DAILY REVIEW 18 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 (289pips) bull closing about 1/3 off the high on ultrahigh vol>23weeks. The candle close and volume suggests profit taking. Some more upside can be expected.  

DAY- The candle is a below average spread (73pips) bear spinning top closing on low vol<1day. The candle close and volume suggests initial buying and reduced selling interest.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Tumbling oil prices with the expected additional supply of Iranian oil also creates further uncertainty. FED Chair Yellen's testimony suggesting that no further rate hike is on the cards anytime soon continues to fuel the bulls.

The Oanda order book shows very thin volume across the price range with trapped shorts still dominant but with the stack of trapped longs around the 1.1170 level still in play.  

Potential demand stacks:  1.1005-1.0990, 1.0955-1.0945

Potential supply stacks: no significant stacks

Potential long (trapped) stops:  1.1098-1.1080
Potential short (trapped) stops: 1.1140-1.1150, 1.1403-1.1415 

The FED's FOMC Minutes yesterday revealed an acknowledgement of potentially unsettling headwinds ahead whilst still holding on to the belief that the US economy and jobs creation will remain on track. The FED's unwillingness to commit to any further rate hike this year whilst adopting a "flexible" stance based on future economic data releases does not bode well for confidence. This is potentially a reason the market to begin looking bias-long again. The Philadelphia FED data will be the catalyst. SM is likely maintain selling pressure to retest yesterday's low 1.1105  or lower before reversing. 

EU long levels: 1.1100  

EU short levels: 1.1330, 1.1375, 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 below average spread (226pips) doji closing on ultrahigh vol>23weeks. The candle close and volume suggests absorption of selling.
DAY- The candle is a below average spread (103pips) bear spinning top closing on high vol>2days. The candle close and volume suggests buying.  

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

The Oanda order book: one the whole, volumes are very thin but the trapped shorts are now in the majority.

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

Potential long (trapped) stops:  1.4270-1.4256, 1.4233-1.4216, 1.4070-1.4040

Potential short (trapped) stops: 1.4578-1.4605, 1.4667-1.4677, 1.4700-1.4715

Without major news releases today, SM is likely to fade weak shorts after inducing them as stated yesterday. SM is likely to fade weak shorts to 1.4420 or higher before reversing.

GU long levels: 1.4190

GU short levels: 1.4420, 1.4485, 1.4500, 1.4600-1.4615, 1.4665-1.4680, 1.4700, 1.4732, 1.4800-1.4815

Posted at 6.30 am EST