DAILY REVIEW 18 August 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 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 (150pips) bull closing about 1/3 off the high on low vol<31days. The candle close and volume suggests more upside.  

DAY- The candle is an average spread (75pips) bull small body spinning top closing on high vol<1day. The candle close and volume suggests more upside.

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: FED's Williams still insist that rate hikes is appropriate but 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. The uncertainty in Turkey and terrorism situation in France and Germany give rise to a risk aversion climate already keep the US Dollar relatively strong regardless of any pending rate hike by the FED. In this situation, raising rates may be counter-productive and this is what the FED will have to contend with.

Oanda order book:  The trapped short positions are more significant but there are newly profitable longs from around 1.1275 as well.    

As expected, we had the FOMC whipsaw yesterday. The FOMC Minutes basically saw some disagreement over the timing of the next rate hike and this resulted in US Dollar weakness. We have the Euro CPI and US Fed Manufacturing Index later. SM is likely to fade weak longs to the 1.1275 level and then reversing to test 1.1390 and higher. 

EU long levels:  1.1175, 1.1150, 1.1130, 1.1118, 1.1108, 1.1100, 1.1045, 1.0950, 1.0938, 1.0911

EU short levels:  1.1195-1.1200, 1.1220, 1.1233, 1.1270, 1.1314, 1.1366-1.1373, 1.1392, 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 (193pips) bear closing near the low on low vol<20weeks. The candle close suggests more downside.
DAY- The candle is a near average spread (110pips) doji closing on high vol<1day. 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 newly profitable longs from around 1.3020 

The UK Retail Sales data is expected today. I expect whipsawing price action around 1.3010 or lower and for price to reverse and test 1.3100. A break and hold above will likely see price headed back to test 1.3350 and higher. We continue to look for short positions.

GU long levels: no long levels

GU short levels: 1.3100-1.3105, 1.3160-1.3175, 1.3220, 1.3325, 1.3340, 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 12.36 am EST