DAILY REVIEW 29 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 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 large spread (160pips) bear closing at the low on very high vol>19days. The candle close and volume suggests more downside.

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 more trapped shorts but also a small volume of profitable shorts from 1.1295.    

FED Chair Janet Yellen is tentatively giving a speech today. Price opened gapped down about 20 pips today after which it was closed and prices made a new low inducing more shorts before retracing. SM is likely to fade weak shorts to the 1.1290 level or higher before reversing. 

EU long levels:  1.1250, 1.1200, 1.1185, 1.1150, 1.1130, 1.1118, 1.1108, 1.1100, 1.1045, 1.0950, 1.0938, 1.0911

EU short levels:  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 large spread (159pips) bear closing at the low on very high vol>21days. 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:  Volumes are very thin with newly profitable shorts from around 1.3140 level 

US Dollar strength on Janet Yellen's speech last Friday caused the nose-dive. I still don't suggest longs on GU because of extreme volatility. The emphasis is to continue to look for short positions. Note that the 1.3275 level for a short that was identified was only 3 pips off the high on Friday. If you had a setup, well....

GU long levels: no level

GU short levels: 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 5.01 am EST