DAILY REVIEW 9 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 (92pips) bull upthrust closing on very high vol>28days. On the position in the chart, the candle close and volume suggests selling absorption.

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 both ways but with new profitable breakout longs from 1.1240 and some much further lower at around 1.1210.    

The reaction to the ECB rate decision was a bit muted. SM is likely to induce more shorts testing Asia low at 1.1262 or lower  before reversing long. 

EU long levels:  1.1234, 1.1210, 1.1150-1.1140, 1.1120, 1.1118, 1.1108, 1.1100, 1.1045, 1.0950, 1.0938, 1.0911

EU short levels:  1.1290-1.1300, 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 the high on low vol>1week. The candle close and volume suggests more upside.
DAY- The candle is a below average spread (91pips) bear closing at the low on high vol<1day. 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 thin with more trapped shorts and newly profitable shorts from the 1.3350 level. 

Trading GU now is not for the fainthearted. I still don't suggest longs on GU because of extreme volatility and continue to look for short positions. Medium impact UK news later will be the catalyst. SM is likely to fade weak shorts to 1.3374 or higher before reversing, a break above 1.3481 may see price test the gap close at 1.3657 although it is unlikely to be this week, today being Friday.

GU long levels: 1.3300 (not a real demand level but possible trapping level)

GU short levels: 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 12.08 am EST