DAILY REVIEW 7 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 an ultra-large spread (195pips) bull closing near the high on gghig vol>3days. The candle close and volume suggests more upside.

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: 1.1305-1.1290, 1.1275-1.1255, 1.1200-1.1195, 1.1000-1.0090
Potential fresh supply: 1.1290-1.1307, 1.1395-1.1405 (actually the volume is pretty insignificant)
Trapped long (stop) orders: 1.1320-1.1295, 1.1065-1.1039 other levels insignificant vol
Trapped short (stop) orders: 1.1365-1.1385, 1.1390-1.1415, no significant volumes above.

Poor US ADP data caused the surge in prices to 1.1369 yesterday. SM is likely to fade weak breakout longs on retest of yesterday's high before reversing to retest the 1.1315 level or lower before resuming the upward move.    

EU long levels: 1.1200-1.1185, 1.1173, 1.1040-1.1025, 1.1002-1.0990, 1.0982-1.0990 

EU short levels: 1.1368-1.1390, 1.1400-1.1410, 1.1442-1.1450, 1.1475-1.1480


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 TODAY!

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 a very large spread (141pips) bull closing 1/3 off the high on very high vol>4days. 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 both trapped short volumes and long volumes. This would suggest to take out long stop orders if SM wants to push further up.

Potential demand stacks: 1.5055-1.5042, 1.5005-1.4990, 1.4954-1.4944, (not really significant volume)

Potential supply stacks: 1.5295-1.5305, 1.5215-1.5327, 1.5340-1.5352, 1.5395-1.5406, 1.5490-1.5505

Potential short (trapped) stops: 1.5285-1.5325, 1.5340-1.5375, 1.5493-1.5507,  no significant higher volumes
Potential long stops: 1.5218-1.5190, 1.5086-1.5026, these are not really significant volumes

With the UK General Elections today, expect very high volatility, likely giving SM the opportunity to clean out all retail positions. SM is likely to retest Asia low 1.5227 or lower before reversing to continue the corrective move up.

GU long levels: 1.5227, 1.5200-1.5190, 1.5080, 1.5055-1.5045, 1.5025-1.5010 

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

Posted at 01.53 am EST