DAILY REVIEW 28 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) bear closing near the low on low vol<5weeks. The candle close suggests more downside. 

DAY- The candle is an above average spread (103pips) bull closing near the high on low vol>2days. The candle close and volume suggests more upside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: The G20 summit was very much focused on the ramifications caused by Brexit. Even though hawkish FED members insist that rate hikes are still forthcoming, there is more reason to expect that the FED should hold off any rate hikes for the time being. Ongoing political factors such as the failed coup in Turkey and terrorism in France and Germany are significant developments that support risk aversion and safety regardless of any pending rate hike by the FED. 

Oanda order book:  Bi-modal trapped short volumes are clearly in play.  The breakout low traders and the top/bottom traders both shorting at the wrong levels and wrong time. 

The FOMC statement yesterday has left a lot of traders in poor trapped positions as price first nosedived and then not only retraced but broke out to new highs. We have the German unemployment data later today. SM is likely to continue to fade weak shorts to 1.1100 or higher before reversing.

EU long levels:   1.1050, 1.0950, 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. 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 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 an above average spread (630pips) bear spinning top closing on high vol<5weeks. The candle close and volume suggests selling absorption (in light of the poor UK data).
DAY- The candle is a near average spread (162pips) bull closing near the high on low 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: The volumes are still very thin with more trapped short positions than trapped long positions.

The effect of the FOMC statement was USD weakness. There is no clear level for a long, we need to continue look for price levels to go short. SM has whipsawed to clear positions and is likely to push higher back to the 1.3300 key level.

GU long levels: no levels

GU short levels: 1.3275, 1.3300-1.3310, 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 1.40 am EST