DAILY REVIEW 22 March 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 while February's candle also closed back inside the January range. 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 an above average spread (561pips) upthrust closing on average vol>7months. The candle close and volume suggests more downside. 

WEEK- The candle is an above average spread (284pips) bull spinning top closing on low vol<1week. The candle close and volume suggests more upside.  

DAY- The candle is a small spread (50pips) bear closing at the low on low vol<44days. The candle close suggests more downside and the volume suggests no selling pressure.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: To put it in a nutshell, last week's FOMC minutes simply showed us that not all is as well as hoped, with the FED recognizing global economic challenges that may derail the US recovery, after all, what is industry without business? Therefore reducing the number of rate hikes to two for the year was a clear sign of safety first. To use a metaphor, no one wants to switch off the artificial life support system while the patient is still in danger. With the ECB pulling out its own bag of tricks, this makes for high volatility and a great trading month. 

Oanda order book:  trapped volumes are clear in both directions with overall more trapped shorts. 

Potential demand stacks:  1.1229-1.1218, 1.1205-1.1175, 1.1161-1.1140, 1.1103-1.1095

Potential supply stacks: not applicable

Potential long (trapped) stops:  not applicable
Potential short (trapped) stops: 1.1343-1.1355, 1.1408-1.1420

The poor US Existing Home Sales data released yesterday still resulted in a stronger USD as SM trapped news traders long and pushed prices lower. We have the German and Euro PMI data release later and this is likely the fuel for the movement. With the trapped volumes in play, SM is likely to maintain selling pressure to retest the current low 1.1229 level or lower to induce shorts before reversing to test the current high of 1.1341 and higher.

EU long levels: 1.1215-1.1200, 1.1195, 1.1170, 1.1135-1.1120, 1.1100-1.1090

EU short levels: 1.1260-1.1275, 1.1300, 1.1335, 1.1352, 1.1384, 1.1473

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 large spread (832 pips) bear inverted hammer closing on average vol>10months. The candle close and volume suggests initial buying.

WEEK- The candle is a large spread (462pips) bull pseudo-hammer closing on low vol<8weeks. The candle close and volume suggests a bear trap in place with upside expected.
DAY- The candle is a below average spread (104pips) "doji" closing on low vol<3days. The candle close and volume suggest no buying pressure. 

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

The Oanda order book: volumes are extremely thin with more volume trapped long. There is no clear significant trapped positions.

Potential demand stacks: 1.4000-1.3990
Potential supply stacks: 1.4595-1.4605

Potential long (trapped) stops:  1.4358-1.4345

Potential short (trapped) stops: 1.4500-1.4520, 1.4414-1.4481

There is UK CPI data release later. SM is is likely to maintain selling pressure to the 1.4337 level or lower to take out the weak longs before reversing.

GU long levels: 1.4340-1.4335, 1.4264, 1.4220, 1.4100-1.4090, 1.400

GU short levels: 1.4485, 1.4500, 1.4603-1.4632, 1.4665-1.4680

Posted at 11.37 pm EST