DAILY REVIEW 1 September 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 pyscholoabout 1/3 off the gical 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 a below average spread (245pips) bull closing near the high on low vol<1month. The candle close suggests more upside.  

WEEK- The candle is a below average spread (174pips) bear closing at the low on low vol<1week. The candle close suggests more downside. 

DAY- The candle is a small spread (42pips) bull closing near the high on average vol>2days. The candle close and volume suggests selling absorption. 

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Hawkish comments by FED Chair Janet Yellen on Friday caused the US Dollar bulls to return as fears of a rate hike were rekindled. However the current risk aversion climate in view of the continuing security situation in Europe is expected to continue and any rate hike is likely to be minimal. In any case, it will likely be limited to one more for the year in light of the forthcoming US Presidential Election and uncertainty for the world economy post-Brexit. In this situation, raising rates may be counter-productive and this is what the FED will need to contend with.

Oanda order book:  Volumes are thin with trapped positions in both directions.    

There are high impact Euro and US data releases today, and prices pushed higher as expected yesterday. SM is likely to retest the 1.1120 level or lower before reversing. 

EU long levels:  1.1120, 1.1118, 1.1108, 1.1100, 1.1045, 1.0950, 1.0938, 1.0911

EU short levels:  1.1210, 1.1290, 1.1325, 1.1350, 1.1365-1.1371, 1.1422, 1.1452, 1.1496-1.1500, 1.1518-1.1528, 1.1592, 1.1600, 1.1615-1.1620, 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. Brexit has already seen the United Kingdom's British Pound drop significantly. The key word here is "United" because of possible secession by the pro-EU countries, if both Scotland and Northern Ireland leave there will not be much of a United Kingdom and the ramifications that such secession will birth. The British Pound as we know it would then lose significant backing economic capital (land, people, resources, etc) and thus lose its value which is not inconceivable.

MONTH- The candle is a below average spread (685pips) bear "spring" closing on very high vol<1month. The candle close and volume suggests absorption of selling.

WEEK- The candle is a below average spread (244pips) bull closing 1/2 off the high on low vol<1week. The candle close suggests selling activity.
DAY- The candle is a below average spread (92pips) bull closing near the high on average vol>2days. The candle close and volume suggests more upside.

Demand: Weekly/Daily: not applicable after 31 year low was broken through. Supply: Short term: 1.5574, 1.5600, 1.5619 

The Oanda order book:  Volumes are very thin with slightly more volume of trapped shorts. 

As analyzed, prices have pushed higher prior to the UK Manufacturing PMI today which will be the catalyst. I still don't suggest longs on GU because of extreme volatility. The emphasis is to continue to look for short positions.  SM is likely to retest the 1.3158 high or higher before reversing. 

GU long levels: 1.3050 (not a real demand level but possible trapping level)

GU short levels: 1.3170-1.3185, 1.3220-1.3230, 1.3275, 1.3325, 1.3350, 1.3370, 1.3420, 1.3447, 1.3485-1.3495, 1.3523-1.3533, 1.3655, 1.3695, 1.3711, 1.3779, 1.3815, 1.3837, 1.3874, 1.3928, 1.3974, 1.4569, 1.4685, 1.4830, 1.4925, 1.4977, 1.5000

Posted at 12.25 am EST