DAILY REVIEW 4 May 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 an above-average spread (745pips) bull closing very near the high on ultra high vol>42months. The candle close and volume suggests more upside. However the monthly trend is still down. 

WEEK- The candle is a below average spread (240pips) bull closing off the high on high vol>1week. The candle close and volume suggests more upside.

DAY- The candle is a normal spread (115pips) bear "pseudo-upthrust" closing on low vol<8days. The candle close and volume suggests lack of selling pressure. However, we can expect downside as SM traps shorts before going back long.

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. Continued mixed US data has dimmed the prospects of a rate hike anytime soon. Greece remains pretty much on the radar as the new Greek government touts a further possible new General Election and Europe waits for a firm resolution to the impasse, all the ingredients of a powder-keg situation are in the making that could cause new fears over the Euro.

The Oanda order book shows net trapped short volumes.  
Potential Fresh demand: 1.1172-1.1153, 1.1137-1.1123, 1.1064-1.1041, 1.1004-1.0095, 1.0958-1.0938
Potential fresh supply: 1.1284-1.1307, 1.1395-1.1405 (actually the volume is pretty insignificant)
Trapped long (stop) orders: 1.1175-1.1160, 1.1110-11090, 1.1068-1.1039 other levels insignificant vol
Trapped short (stop) orders: 1.1220-1.1260, 1.1289-1.1315, no significant volumes above.

As expected last Friday, EU made a new high at 1.1288 before profit taking by SM to close out the week. SM is likely continue to fade weak longs testing Friday's low 1.1173 or lower before resuming the upward move.    

EU long levels: 1.1173-1.1150, 1.1133, 1.1100-1.1090, 1.1040-1.1025, 1.1002-1.0990, 1.0982-1.0990 

EU short levels: 1.1217-1.1220, 1.1250-1.1270, 1.1288-1.1317


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 the general election (Source: ForexLive). The rubber meets the road this week on 7 May 2015.

MONTH - The candle is an above average spread (932pips) bull closing 1/5 off the high on high vol>2months. The candle close and volume suggests more upside. 
WEEK - The candle is an above average spread (330pips) bear upthrust closing on high vol>4weeks. The candle close and volume suggests more downside.

DAY - The candle is an ultra-large spread (283pips) bear closing off the low on low vol<8days. The candle close and volume suggests more downside. Clearly SM profit taking prior to the UK elections and squaring out positions.

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

The Oanda order book shows more trapped short volumes than long volumes, the likely move is to take the short trapped stops before moving down and then back up.  

Potential demand stacks: 1.5122-1.5109, 1.5105-1.5090, 1.5059-1.5044, 1.5005-1.4990, 1.4964-1.4944, (not really significant volume)

Potential supply stacks: 1.5160-1/5175, 1.5185-1.5205, 1.5124-1.5225, 1.5240-1.5256, 1.5295-1.5305, 1.5395-1.5406, 1.5490-1.5505

Potential short (trapped) stops: 1.5195-1.5205, 1.5295-1.5308, 1.5316-1.5330, 1.5342-1.5355, 1.5493-1.5507,  no significant higher volumes
Potential long stops: 1.5114-1.5088, 1.5060-1.5037, there are no significant volumes below

As expected on last Friday, prices pushed to Thursday's breakout level of 1.5396 and tanked from there, with SM likely profit taking and re-positioning with the upcoming UK elections this Thursday 7 May 2015. We can expect extremely volatility in this period without clear direction until it is over. SM is likely to to fade weak shorts to 1.5195 or higher before reversing to retest last Friday's low at 1.5113, perhaps pushing lower to clear out positions prior to Thursday.  

GU long levels: 1.5106-1.5085, 1.5055-1.5045, 1.5025-1.5010 

GU short levels:  1.5195-1.5215, 1.5242-1.5260, 1.5312-1.5335, 1.5390-1.5405, 1.5495-1.5005

Posted at 12.06 am EST