Order Book Preview Ahead of ECB and BoE

Three key risk events are slated for Thursday: the ECB and BoE rate decisions, potential further QE and Initial Jobless out of the U.S.

Realistically speaking, no change is expected out of the BoE or ECB. Given the run of poor U.S. data lately, a lower print on the Initial Jobless claims wouldn't be a major shock but could be a market mover.

Moves do take their toll rapidly, but assuming everything comes in close to expectations the markets are still gearing themselves up nicely for NFP and potential moves for this week.

Order books have essentially been grinding in one direction as Retail Traders have been positioning themselves aggressively on one side of many of the trades. However, we started to see some of these books change as we hit key levels in many pairs.

EUR/USD
Retail Traders remain short on this pair. We continue to hold long positions, but are focused on looking for the next short opportunity.

However, the slow grind sideways and higher has continued to find more sellers and buyers, so the grind is continuing to move in the same direction.


We have started to see a slight correction as highlighted in the chart above and this was, as expected, focused around the key 1.3100 handle.
Catalysts causing the pair to breach this level could offer a switch in the order book and potential short options. If we continue to find more sellers above this level, we could continue our move higher.

The price is now resting above the 200 Day SMA on Daily Charts, but looking Bearish on a lower Ichi cross. This gives a bit of a mixed picture and bodes well for a turning point if the order book clears out.



GBP/USD
The Pound had been clearing out its order book nicely, and today we saw a switch finally with Retail Traders closing out their long positions. 1.5400 is key again, but we were long previously. After taking a short at the beginning of this week, we returned to our long position again.

The relative chop in the order is expected as the order book gets cleared. Potentially, the long position could be short lived and realistically it is better to look for a retracement to get a better value entry. But with Retail Traders shorting this pair, we could see a push back to the 1.5600 level creating a lower range between 1.5000 and 1.56000 if the trend continues.


The 1.5400 level is going to be key to the next move in this pair, so keep a close eye on the risk events over the next two days.


AUD/USD
The aussie is playing normal tricks, switching its positioning again on Tuesday as the move lower caused Retail Traders to buy this pair en mass again, causing even further extreme levels.
With the switch we jump shorted the pair, but at these levels we are unlikely to find many more buyers. As we chop around, we might see a small push higher and then lower again.

Ideally the pair needs a sustained period of chop or push higher to clear the order book and stops, allowing it to correct. That said, while the pair continues to find buyers we prefer to maintain shorts - be on your toes with the Aussie.

The daily chart continues its test of the 0.9500 level. With such bias and extremes to the upside we wouldn't be surprised if people started stop hunting around the key risk events to clear out some orders. That could be the key time to jump long this pair for a correctional move higher.



USD/CHF
Typically a pair which maintains long trends now that the EUR/CHF peg has been released. We have been holding this pair short from 0.9700, but the pair now looks ready to switch to provide a long opportunity.
Price Action over the next few days could be interesting, but the 0.9350 and 0.9500 levels are key in this pair and could offer turning points in bias for the next move.
As always, we are looking for a reading below 0 in our rate of change in the order book, suggesting the closing of the long positions in order for a contrarian buy signal.