DAILY REVIEW 5 September 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 (320pips) doji closing on low vol<23months. The candle close and volume suggests no selling pressure.  

WEEK- The candle is a below average spread bear "dragonfly" closing on low vol>4weeks. The candle close and volume suggests selling absorption. 

DAY- The candle is an above average spread (101pips) bear closing at the low on high vol>21days. The candle close and volume suggests more downside. 

Levels of interest: Demand: Daily/Weekly:  1.0000  

Background: Hawkish comments by FED officials even after the poor NFP data caused the US Dollar bulls to return as fears of a rate hike were rekindled. Note that the current risk aversion climate in view of the continuing security situation in Europe is expected to continue and any rate hike, if any, 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 trapped positions in both directions.    

NFP data on Friday was poor and prices spiked upwards before fading the entire move as FED officials kept talking up the rate hike. Although SM has faded weak longs to retest the 1.1150 level and prices have steadily moved north bound since today's open, SM is likely to reverse at about 1.1200 key level to induce shorts at 1.1150 or lower before moving back up. 

EU long levels:  1.1150-1.1140, 1.1120, 1.1118, 1.1108, 1.1100, 1.1045, 1.0950, 1.0938, 1.0911

EU short levels:  1.1210, 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 (506pips) bear closing about 1/2 off the low on low vol<6months. The candle close and volume suggest no selling pressure.

WEEK- The candle is a below average spread (293pips) bull closing near teh high on low vol>1week. The candle close and volume suggests more upside.
DAY- The candle is a near-average spread (100pips) bull upthrust closing on high vol>4days. The candle close and volume suggests selling activity.

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 slightly more volume of trapped longs. 

I still don't suggest longs on GU because of extreme volatility and continue to look for short positions.  UK services PMI data is later. SM is likely to retest the 1.3352 level or higher before reversing. 

GU long levels: 1.3220 (not a real demand level but possible trapping level)

GU short levels: 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 4.18 am EST