DAILY REVIEW 15 September 2014

EU Analysis:

EU: The daily candle is an average spread (70pips) bull large body spinning top closing off the high on very high vol>1day. The candle close and volume suggests more upside. Levels of interest: Demand: Daily/Weekly: 1.2777, 1.2754, 1.2661 Supply: short-term: 1.3025, 1.3050 Weekly/Daily: 1.4184, 1.4246 pivot. Background: The situation in Ukraine remains unresolved with the EU and US imposing fresh sanctions on Russia and the Russians rattling their sabre as well. Additionally, the ISIS crisis intensified with the murder of a British aid worker. These ongoing situations continue to drive USD strength and that in itself creates the continuing demand for USD. ECB’s Coene also remarked that falling currency (Euro) is rather helpful and that ECB's projections for Sep was on the optimistic side which basically tells us that the ECB may well see a lower Euro as being better for its members until they recover. The sentiment is still one of fear with the geo-political situations and of caution for Euro fiscal considerations giving us a clear immediate and longer term short bias for the EU. A look at the open orders above shows a likely stack of buy orders around 1.2850 – 1.2900 with hardly any demand below 1.2750 The figures above also show Net sell orders above current price of 1.2964 dominant but without any clear significant level until 1.300 and the 1.3050 Looking at the Net order stacks, The biggest payout for SM will be for the lower levels back toward 1.2850 Looking back to the charts, there is no significant supply level anywhere near the 1.3000 – 1.3050 level. The current demand stack sits exactly where we would expect it above the current pivot low of 1.2858 and therefore suggests that the short term bias is also downwards. SM is likely to induce breakout traders long at the 1.2988 pivot or even higher to around the 1.3049 before reversing to continue the downward trend. Note the confluence 1.2988 (38.2%Fib) 1.3000 (50%Fib) and 1.3049 (61.8%Fib). The Order book chart shown above can be accessed at the Oanda website.

EU long levels: 1.2777, 1.2754, 1.2661  
EU short levels: 1.2988, 1.3025, 1.3050 

GU Analysis 

GU: The weekly candle is an above average spread (224pips) bull closing near the high on ultrahigh vol>59weeks. The candle close and volume suggests more upside. The daily candle is a below average spread (72pips) bull hammer closing on high vol<4days. The candle close and volume suggests buying. Demand: Weekly/Daily:  1.5870, 1.5850 Short term: 1.6058
Supply: Short term: 1.6158, 1.6185, 1.6230 (Gap), 1.6320 (Gap close) 
Background: The upcoming referendum on a possible independent Scotland this Thursday 18 Sep 2014 will give the Sterling considerable volatility as it is too close to call either way. Scotland leaving the 307 year union will have considerable ramifications, quite possibly the least of which are Scotland's local economics or security as clearly, even if the Sterling will look less sterling as it becomes undermined, the possibility of the UK's standing and credibility in NATO being jeopardized at a time when ISIS and Russia loom large has significant geopolitical impact in Europe and the world. It does look like the 156pips gap caused by this initial weekend news now has the possibility of being closed. Prices opened with a 12pips gap up which has since been closed. SM is likely to fade weak longs to around the 1.6215 level or lower before reversing back to test Asia high (1.6277) or the gap close at 1.6320 The cable may whipsaw as news filters through on the various polls conducted to guess the likely outcome of the referendum.

GU long levels: 1.6050, 1.5870 
GU short levels: 1.6277, 1.6320 (Gap close), 1.6340 

Updated at 03.09 am