DAILY REVIEW 23 April 2015

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. Bias is still strongly down.  

MONTH- The candle is a large spread (778pips) bear closing nearly 1/2 above the low on ultrahigh vol>1month. The candle close and volume suggests profit taking.  However more downside can be expected as price will likely test the low. 

WEEK- The candle is a above-average spread (467pips) bull closing near the high on high vol>184weeks. The candle close and volume suggests more upside.

DAY- The candle is a normal spread (92pips) bear upthrust on vol>2days. The candle close and volume suggests more downside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Fundamentals for the Euro remain weak as the US FED mulls over the rate increase implementation. ECB Bond purchases remain strong and at high pace, the implication of course is that this creates demand for the Euro. QE for the ECB is on course and will run its course. Mixed US data has probably dimmed the prospects of a rate hike anytime soon. Weekend news: ECB's Mario Draghi said, "The exchange rate is not a policy target, it is the outcome of different business cycles in different jurisdictions and different monetary policies or monetary policy cycles. So I cannot express any hope about it." and (Draghi) rejecting speculation that Greece may be forced to abandon the euro, reiterating that Europe's single currency is irrevocable adding, "It is pointless to go short on the euro."

The Oanda order book still shows gross and net trapped short volumes. 
Potential Fresh demand: 1.0656-1.0640, 1.0625-1.0610, 1.0600-1.0590, 1.0500-1.0490, 1.0465-1.0430, 1.0400, 1.0000
Potential fresh supply: 1.7095-1.8020, 1.0843-1.0865, 1.0895-1.0905, 1.0980-1.1000 (actually the volumes are pretty insignificant)
Trapped long (stop) orders:1.0658-1.0640, 1.0623-1.0595,  other levels insignificant vol
Trapped short (stop) orders: 1.0712-1.0725, 1.0745-1.0755, 1.0795-1.0805, 1.0843-1.0865, no significant volumes above.

The joint impact of the SNB's implementation of negative interest rate plus better than expected US Housing news data has finally caused the drop already broken right through Asia low and headed toward the 1.0658 pivot. SM is likely to test the 1.0658 pivot or lower. A break below 1.0569 will expose the swings low.   

EU long levels: 1.0658-1.0650, 1.0622-1.0610, 1.0600-1.0590, 1.0578-1.0560, 1.0500-1.0496, 1.0490-1.0480, 1.0000

EU short levels: 1.0741-1.0755, 1.0790-1.0815, 1.0865-1.0885, 1.0900, 1.0940-1.0955, 1.1000, 1.1034-1.1040


GU Analysis:

GU: Perspective: GU has closed strongly past the last month's low 1.4633 and looks headed toward  the next monthly pivot 1.4225 monthly pivot which is the next possible level of support/demand. With the UK General Elections due this 15 May 2015, we can expect volatility as the market reacts to the possible twists and turns in the run up. The EY Item Club, a UK economic forecasting group that produces quarterly economic UK forecasts, says that the UK's economic recovery is  "entrenched" and will not be blown off course by uncertainty surrounding next month's general election (Source: ForexLive)

MONTH - The candle is a large spread (794pips) bear closing 1/4 off the low on high vol>1month. The candle close and volume suggests profit taking prior to a retest of the lows. 
WEEK - The candle is an above-average spread (394pips) bull closing about 1/5 off the high on average vol>2weeks. The candle close and volume suggests more upside.

DAY - The candle is a very large spread (165pips) bull closing 1/4 off the high on high vol>2days. The candle close and volume suggests more upside.

Demand: Weekly/Daily:  1.4870 - 1.4812, 1.4229 Supply: Short term: 1.5574, 1.5600, 1.5619 

The Oanda order book shows net trapped short volume.  

Potential demand stacks: 1.4952-1.4930, 1.4905-1.4875, 1.4800-1.4780, 1.4760-1.4740, 1.4705-1.4790, 1.4600-1.4688 (not really significant volume)
Potential supply stacks: 1.5070-1.5105, 1.5192-1.5205, 1.5300-1.5310
Potential short (trapped) stops: 1.4975-1.5005, 1.5040-1.5070, 1.5095-1.5010, 1.5195-1.5205, 1.5290-1.5310, no significant higher volumes
Potential long stops: 1.4910-1.4890, 1.4855-1.4835 no significant lower volumes

The bullish MPC minutes pushed prices to 1.5078 before retracing to fade weak longs. SM is likely to continue fading weak longs to 1.4950 or lower before reversing to continue the corrective upswing.  

GU long levels: 1.4910-1.4900, 1.4869, 1.4852-1.4840, 1.4805-1.4795, 1.4780-1.4765, 1.4725-1.4715, 1.4700-1.4690, 1.4475, 1.4227

GU short levels:  1.4975-1.5008, 1.5040-1.5070, 1.5100-1.5135, 1.5300, 1.5365, 1.5395

Posted at 3.41 am EST