DAILY REVIEW 3 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 (74pips) bear closing at the low on very high vol<1day.  The candle close and volume suggests more downside.

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:  Trapped short volumes dominate.  

Potential demand stacks:  1.1103-1.1094

Potential supply stacks: not applicable

Potential long (trapped) stops:  not applicable
Potential short (trapped) stops: 1.1215-1.1225

It was much ado about nothing yesterday as the EBC kept its policies and US FED officials reiterated a forthcoming rate hike, possibly in June or July. It is interesting as the US continues with its tightening whilst the rest of the world is easing monetary policy. With the US NFP data later today, it will likely be a whipsaw up and down with weak numbers or down and back up with strong numbers as the market has already priced in the impending hikes unless we have a blockbuster release where the deviation is very large toward USD strength in which case, 1.0000 would be the next target. 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 small spread (68pips) bull "tombstone doji" closing on high vol<2days. The candle close suggests more downside and the volume suggests more absorption of selling.

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

The Oanda order book: Overall more trapped shorts with newly profitable shorts. 

Potential demand stacks: 1.4350-1.4328
Potential supply stacks: 1.4541-1.4566

Potential long (trapped) stops: 1.4381-1.4360

Potential short (trapped) stops: 1.4435-1.4446, 1.4460-1.4470, 1.4495-1.4505, 1.4600-1.4610

The pair did not make new lows yesterday despite the US data and pronouncements of forthcoming interest rate rise. Yesterday I wrote, "SM is likely to create selling pressure to retest the 1.4400 key level or lower before reversing". Price went to 1.43999 and reversed. SM has the bulk of trapped short traders now at their mercy. SM is likely to continue fading the trapped shorts to 1.4475 or higher prior to the US NFP release. 

GU long levels: 1.4400, 1.4385, 1.4340-1.4330

GU short levels: 1.4475, 1.4505-1.4515, 1.4600, 1.4640, 1.4770, 1.4790, 1.4800-1.4820 

Posted at 04.07 am EST