DAILY REVIEW 4 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 (180pips) bull pseudo "upthrust" closing on low vol<3weeks. The candle close and volume suggests no selling pressure.  

DAY- The candle is an ultralarge spread (241pips) bull closing near the high on very high vol>9days. The candle close and volume suggests 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 continues to show net trapped short volumes but noticeably thinner now. 

Potential demand stacks:  1.0804-1.0765

Potential supply stacks: 1.1350-1.1368

Potential long (trapped) stops:  1.0676-1.0660, 1.0635-1.0622
Potential short (trapped) stops: 1.1146-1.1209 

As expected SM pushed price higher on news. Current sentiment is a weaker USD with price headed toward testing the 1.1304 breakout level. ECB's Draghi is due to speak soon and SM is likely to test 1.1300 or higher before reversing.

EU long levels: 1.1047, 1.1000, 1.0800-1.0795  

EU short levels: 1.1300, 1.1350

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 (264pips) bear spinning top closing on high vol>21weeks. The candle close and volume suggests buying.
DAY- The candle is an ultralarge spread (265pips) bull closing near the high on high vol>2days. 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: newly trapped short volumes are still less than the trapped long volumes.

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

Potential long (trapped) stops:  1.4228-1.4200, 1.4152-1.4136, 1.4075-1.4021 (small vol)

Potential short (trapped) stops:1.4448-1.4479, 1.4535-1.4548, 1.4700-1.4770

The volumes remain very thin and caution is advised. As expected, price is well on its way to test the 1.4800 key level. George Carney will be speaking later and it will likely be a catalyst for SM. SM is likely to push lower to 1.4546 level or lower before reversing to continue the North-bound retracement.

GU long levels:  1.4500

GU short levels: 1.4700, 1.4800-1.4815

Posted at 2.58 am EST