DAILY REVIEW  25 Jul 2013

EU: The daily candle is a below normal-spread (80pips) bear spinning top on near-average vol >4days with bearish vol divergence. Price closed 1.31997, just a little below 1.3200 key level.  Price tested but was rejected at the previous breakout level of 1.3253 with SM taking stops at 1.3255 and reversing. The candle close and increased volume yesterday suggests that there is buying going on. Price has not reached the daily 1.3390 – 1.3400 supply area yet but the last 186pips took 22 H4 candles whilst the previous 178pip move took 8 H4 candles suggesting that the push up is starting to lose momentum.  

Price is close to the daily ema800 at 1.3249 (my apologies I wrote ema200 yesterday).  After 3 days of rise, there is always the possibility of a reversal or correction. Today, I want SM to establish Asia high/low to gauge where they decide to set their initial levels. If the Asia high is about the same as yesterday (1.3325), my suspicion is that they may not fully go all the way to 1.3255 to spike. If there are already weak longs trapped, they will not release these guys. On the technical side, we should be looking out for possible Head&Shoulder retest of right shoulder at 1.3239, a spike/upthrust through this level  followed by a setup will see me taking a short. Price closed above the 1.3163 levels so if SM stopruns the key level 1.3200 or yesterday’s lows, I will be prepared to go long.

EU long levels: 1.3200, 1.3180, 1.3163  EU short levels: 1.3240, 1.3255, 1.3305

GU: Daily candle is a normal-spread bear (101pips) closed off the low on below average vol>4days. The daily bearish volume divergence played out as expected and reversed to a low of 1.5288. The volume in this down move is not convincing to consider a full blown reversal so I will still consider a long trade with a setup. Do note that the 1.5390/1.5400 level is still a possible reversal level so I will be cautious if these levels are reached. A possible SM strategy could be to create selling pressure testing close to or even spiking yesterday’s lows and then reversing upward.  Another possibility is that they create buying pressure to fade the weak shorts before reversing back down, in this scenario, I will look for setups at the breakout level of 1.5350 and also the next level at 1.5366. I take entries only with setups confirming the trade.
GU long levels:  1.5290 GU short levels: 1.5354, 1.5366, 1.5390, 1.5400