DAILY REVIEW 2 June 2016
  

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. December's candle suggests a retracement is in progress and January's candle is an "inside" of the December candle while February's candle also closed back inside the January range. We also note that there are no significant orders/ stops lower until the 1.0000 key level. Bias is still strongly down from a market structure perspective.    

MONTH- The candle is an above average spread (518pips) bear closing at the low on low vol<9months. The candle close suggests more downside.  

WEEK- The candle is a below average spread (132pips) bear closing at the low on low vol<11weeks. The candle close suggests more downside and volume suggests smart money fade.

DAY- The candle is an above average spread (79pips) bull closing near the high on ultrahigh vol>58days. The candle close and volume suggests more upside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Last Friday, FED Chair Janet Yellen said, "It's appropriate, and I've said this in the past, I think for the Fed to gradually and cautiously increase our overnight interest rate over time and probably in the coming months, such a move would be appropriate,"  and so the USD bulls returned late on Friday. 

Oanda order book:  Note the small newly profitable long volumes at around the 1.1185 level but still with trapped short volumes dominating.  

Potential demand stacks:  1.1175-1.1150, 1.1113-1.1092

Potential supply stacks: not applicable

Potential long (trapped) stops:  not applicable
Potential short (trapped) stops: 1.1213-1.1225, 1.1243-1.1250, 1.1255-1.1263

We have the Euro Interest Rate decision and US ADP Non-Farm data today as well as ECB's Draghi speaking. SM is likely to fade weak longs to around 1.1185 or lower before reversing or higher before reversing.

EU long levels:  1.1170, 1.1100-1.1090, 1.1050, 1.1035, 1.1000

EU short levels:  1.1154, 1.1200, 1.1217, 1.1250, 1.1265, 1.1291, 1.1311, 1.1345, 1.1386, 1.1397-1.1420, 1.1452, 1.1485-1.1491, 1.1500-1.1510, 1.1520-1.1525, 1.1532, 1.1580, 1.16001.1615, 1.1619-1.1630, 1.1711

GU Analysis:

GU: Perspective: GU has closed below April pivot 1.4564. The June close of 1.5701 becomes important as a supply level to overcome for higher prices. The downward bias is still dominant. 

MONTH- The candle is a below average spread (437pips) bear spinning top closing on high vol<3months. The candle close and volume suggests selling.

WEEK- The candle is a normal spread (297pips) bull closing about 1/3 off the high on low vol>2weeks. The candle close suggests more upside and the volume suggests initial selling.
DAY- The candle is a normal spread (121pips) bear large body spinning top closing on ultrahigh vol>358days. The candle close suggests more downside but the volume suggests initial buying.

Demand: Weekly/Daily:  1.3705-1.3500 Supply: Short term: 1.5574, 1.5600, 1.5619 

The Oanda order book: Overall more trapped longs with newly trapped shorts but volumes are still very thin. 

Potential demand stacks: 1.4350-1.4340
Potential supply stacks: not significant

Potential long (trapped) stops: 1.4410-1.4403, 1.4384-1.4368, 1.4333-1.4323

Potential short (trapped) stops: 1.4441-1.4450, 1.4500-1.4508, 1.4601-1.4613

We have a speech by BOE Governor George Carney after the ECB's President Draghi's speech so expect extreme volatility today, without any clearly trapped groups, expect this to be a wonderful whipsaw opportunity for SM to clear the deck, likely next move is up based on the volume and spread on yesterday's candle but it really depends on the releases today and for this pair, any news on Brexit. SM is likely to create selling pressure to retest the 1.4400 key level or lower before reversing to retest 1.4600 or higher.

GU long levels: 1.4400, 1.4385, 1.4340-1.4330, 1.4310, 1.4300

GU short levels: 1.4600, 1.4640, 1.4770, 1.4790, 1.4800-1.4820 

Posted at 02.28 am EST