DAILY REVIEW 23 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 a below average spread (183pips) bear closing about 1/3 off the low on average vol<2weeks. The candle closeand volume suggests reduced demand and more downside.  

DAY- The candle is a normal spread (121pips) bear closing off the low on low vol<4days. The candle close and volume 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. FED Chair Yellen's testimony suggesting that no further rate hike is on the cards anytime soon continues to fuel the bulls.

Oanda order book: volumes are very thin but there are newly profitable and trapped trapped shorts forming the bulk of the volume distribution.  

Potential demand stacks:  1.1005-1.0990, 1.0955-1.0945

Potential supply stacks: no significant stacks

Potential long (trapped) stops:  1.0991-1.0982
Potential short (trapped) stops: 1.1132-1.1141, 1.1295-1.1305 

Later US data will likely be the catalyst for the day. SM is likely to fade weak shorts to around the 1.1115 level or higher before reversing to test 1.1000.

EU long levels: 1.0980 , 1.0955 

EU short levels: 1.1130, 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 normal spread (300pips) bear closing 1/2 off the low on very high vol<1week. The candle close and volume suggests buing absorption and more downside can be exoected.
DAY- The candle is an ultralarge spread (333pips) bear closing 1/4 off the low on very high vol>6days. The candle close and volume suggests more downside.

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

The Oanda order book: trapped shorts now form the bulk of the volume distribution.

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

Potential long (trapped) stops:  1.4058-1.4025, 1.3990-1.3975

Potential short (trapped) stops: 1.4165-1.4190, 1.4288-1.4316

UK data will be out later giving SM the opportunity to remove weak shorts above the 1.4145 level before resumption of the down move. SM is likely to fade weak shorts to the 1.4234 level or higher before reversing.

GU long levels: 1.4050, 1.3890

GU short levels: 1.4234, 1.4353, 1.4420, 1.4485, 1.4500, 1.4600-1.4615, 1.4665-1.4680

Posted at 1.37 am EST