DAILY REVIEW  30 Jul 2013

EU: Daily narrow-spread (54pips) bear candle on low vol<4 days closing almost ½ off the low. Price closed at 1.3261 which is just above the daily ema200  1.3249. The daily candle close and volume suggests no selling pressure. Well, yesterday EU did not exactly go the way of Buzz Lightyear’s “to infinity and beyond” just yet. Anyway, it is just another opportunity for a second bite of the cherry. Based on the lack of selling interest, SM will be likely to continue the selling pressure to rope in more shorts before reversing back up possibly at around yesterday’s lows. However, a failure to close above 1.3270 during London may see a deeper drop. Nothing has really changed as there is yet to be any fundamental bias-changing news, at least not until FOMC and NFP this week.

EU long levels: 1.3238, 1.3225, 1.3210  EU short levels: 1.3300, 1.3330, 1.3390, 1.3400, 1.3420

GU: Daily candle is a normal-spread (85pips) bear closing on low vol<44days which suggests a SM mark-down move. A look at the 2 day candles reveal low volume <35candles.  The candle close suggests more mark-down before going back up. The mark-down on such low volume suggests that SM is repositioning for a long, fading all the weak longs since last week (broker’s open orders last week were net long, now it has just turned net short telling me that SM has managed to induce retail shorts so no prizes for guessing what SM will do next….). Generally the lower SM pushes price during Asia and London, the more likely that we are closer to the reversal levels. However as the ratio of net shorts is not significantly high yet, I will take a short if I get a setup at around 1.5362 for a short term trade.

GU long levels:  1.5300, 1.5277, 1.5262 GU short levels: 1.5362, 1.5422, 1.5433

Note: We must take trades only when we see setups, no matter what system we trade.