DAILY REVIEW 19 July 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 (515pips) bear closing about 1/4 off the low on average vol>2months. The candle close and volume suggests absorption of selling.  

WEEK- The candle is a below average spread (149pips) "tombstone" doji closing on low vol>1week. The candle close and volume suggests absorption of herd selling prior to breakout. 

DAY- The candle is a small spread (46pips) bull closing near the high on low vol<9days. The candle close suggests more upside. The volume suggests a fade by SM prior to reversing.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Brexit, the "strong" US data last Friday and the latest 5-10 year inflation expectation that was reduced from 2.5% to 2.3% are a mixed bag of signals. Even though FED officials insist that there will be more rate hikes forthcoming, there is more reason to expect that the FED should hold off any further rate hikes for the time being. However, political factors such as the attempted coup in Turkey and the tragedy in Nice are significant developments that support risk aversion and safety regardless of any pending rate hike by the FED.

Oanda order book:  Trapped short volumes remain significant and in play.  

Nothing has changed except the clues are a bit clearer. US data release later may be the catalyst. SM is likely to continue to fade weak shorts to the 1.1100 key level or higher before reversing. 

EU long levels:   1.1023, 1.0965, 1.0938, 1.0911

EU short levels:  1.1100, 1.1120, 1.1160-1.1165, 1.1190, 1.1270, 1.1314, 1.1366-1.1373, 1.1391, 1.1422, 1.1452, 1.1485-1.1491, 1.1500-1.1510, 1.1520-1.1525, 1.1532, 1.1580, 1.1600, 1.1615, 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 an ultralarge spread (1897 pips) bear closing near the low on historical ultrahigh vol. The candle close and volume suggests more downside.

WEEK- The candle is a large spread (630pips) bull closing slightly less than 1/2 off the high on very high vol>2weeks. The candle close and volume suggests selling absorption and possible buying.
DAY- The candle is a below average spread (127pips) bull closing 1/2 off the high on average vol<4days. The candle close and volume suggests more downside.

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: The volumes remain too thin to have any significance.

I will repeat exactly the same as yesterday:- "The mammoth drop considered, GU is already heavily discounted. It does look like GU is poised to rise but there are no clear levels to take it long except possibly from the 1.3175 or 1.3100 level, setup permitting." 

It does look like "support" is at the 1.3200 key level and pushing upwards. Volume is still extremely thin and any upward movement in this pair will likely be on cross-flows and not general USD weakness. Key UK data releases later will be the catalyst. Bias remains to look for shorts at the levels identified.

GU long levels: 1.3175, 1.3100

GU short levels: 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 2.11 am EST