DAILY REVIEW 23 January 2015

Background: The ECB meeting decision on the scale (EUR1.1 Trillion) and manner of the QE implementation yesterday signals impending Fundamental changes to the market structure for at least a few years. This is different from simply trading the periodic economic releases. The size of the QE program caused an initial drop that was immediately retraced on the decentralization comments where SM got rid of all weak shorts and exited long positions. It was downhill all the way from there for the Euro. The stinker in it is that Draghi says that the ECB will even buy bonds with negative yield. This is really a sign of the times, of an "all or nothing" attempt to reverse the economic slide in Europe. The US dollar was further strengthened by the Canadian central bank's decision to cut the interest rate by 25 basis points, sending the USDCAD sky rocketing as it is another fundamental change that was deemed necessary in the wake of falling oil prices, amongst other concerns. More volatility can be expected in the lead up to Sunday's Greek election.

EU Analysis:

EU: Perspective: Price has closed below the weekly/daily 1.1376 pivot and does not have any significant demand level till the 1.1000 - 1.0762 pivot potential demand level. Bias is strongly down. Possible retracement short levels will be around the previous breakout levels. Daily- The candle is a ultralarge spread (335pips) bear closing near the low on very high vol>4days. The candle close and volume suggests more downside.   
Levels of interest: Demand: Daily/Weekly:  1.1000, 1.0762  

As I write, price has already crashed through 1.1300 Based on the Oanda order book, there are no significant supply or demand levels as most retail traders have been washed out by the price action yesterday. With the bulk of orders sitting at the 1.1370 level and price has pushed 1.1257 at the moment. SM is likely to push to around the 1.1250 level or slightly lower to trap shorts before reversing back up to reload at the 1.1350 -1.1370 level or higher before resuming the downtrend.

EU long levels: 1.1510, 1.1490, 1.1458, 1.0762

EU short levels: 1.1375, 1.1400, 1.1450, 1.1500


GU Analysis:

GU: Perspective: GU has dropped on USD strength amd headed to test the 1.4812 pivot. A potential corrective move level. Day- The candle is a ultralarge spread (240pips) bear closing near the low on very high vol>3days. The candle close and volume suggests more downside. 

Demand: Weekly/Daily:  1.4870 - 1.4812, 1.4229 Supply: Short term: 1.5400, 1.5470, 1.5500, 1.5540, 1.5600 

Prices have pushed lower and  with the wash and rinse, there are no significant supply order stacks in the Oanda order book, save for some small demand at 1.4950-60, 1.4920-30, 1.4900 SM is likely to maintain selling pressure to 1.4950 or lower before reversing to fade weak longs.

GU long levels: 1.4950, 1.4930, 1.4870, 1.4812 

GU short levels: 1.5050, 1.5100, 1.5150, 1.5200

Posted at 4.20 am EST

DAILY REVIEW 22 January 2015

EU Analysis:

EU: Daily- The candle is a large spread (138pips) bull closing 1/2 off the low on low vol>2days. The candle close and volume suggests more upside.   
Levels of interest: Demand: Daily/Weekly:  1.1376, 1.0762  

Background: The Euro remains weak. The coming Greek election this weekend may prove significant. Any long position is counter-trend and "corrective" as the technical trend is still down.

With the looming ECB interest rate decision and press conference where the spectre of QE is likely to be discussed, Smart money made use of the rumour mill yesterday to wash and rinse to the low and then back to the high of >130pips of range essentially making anyone who takes any trades in this range extremely vulnerable to the forthcoming news release today. The next significant possible demand level is weekly level at 1.1376 and after that, 1.0762 Based on the Oanda order book, there is a lot of volume trapped shorts from 1.1600 with possible stops starting at 1.1670 to the 1.1700 key level, next set of stops at 1.1750 and further up at 1.1800. Possible fresh "demand" is at 1.1510-1.1520 and 1.1490-1.5000 SM is likely to continue creating buying pressure to around yesterday's high 1.1678 or higher before reversing to resume the downtrend. The long term trend bias remains short.

EU long levels: 1.1510, 1.1490, 1.1458, 1.0762

EU short levels: 1.1670, 1.1722, 1.1790, 1.1850


GU Analysis:

GU: Day- The candle is a normal spread (103pips) bear "near doji" closing on low vol>1day. The candle close and volume suggests more upside. 

Demand: Weekly/Daily:  1.4870 - 1.4812, 1.4229 Supply: Short term: 1.5400, 1.5470, 1.5500, 1.5540, 1.5600 

Background: The potential UK leadership continuity issues with forthcoming elections and the poor economic performance continue to weigh heavily on the GBP. The ECB interest rate decision and discussions on QE will also weigh on the GBP.

Essentially, SM performed their wash and rinse operation as well clearing stops before reversing back upwards. From the Oanda order book, there is significant volume trapped short and possible short stops located around 1.5180,1.5200, 1.5240-70, 1.5310 and possible long stops from around 1.5000 - 1.5030 There are no significant supply order stacks but there are some at 1.5400 and 1.5500 SM is likely to create buying pressure to test yesterday's high 1.5178 or higher before reversing to resume the downtrend.

GU long levels: 1.5120, 1.5100, 1.5030, 1.5000, 1.4938, 1.4870, 1.4812 

GU short levels: 1.5270, 1.5300, 1.5345, 1.5400, 1.5470, 1.5500, 1.5540, 1.5600

Posted at 5.15 am EST