DAILY REVIEW 14 Aug 2013

EU: Daily candle is a near-normal spread (84pips) bear wide-body spinning top closing on below-average vol>3 days. The increased volume and the close suggests buying and the low yesterday tested last week’s low of 1.3232. Context: Weekly no demand. The headline news was not good and but the adjusted MOM figures were “largest gain” since Dec 2012. SM quite obviously used the US news yesterday to take out even more weak longs after long positions actually increased. SM would likely be expecting the herd to jump in on shorts so a stop run of yesterday’s lows may be a possible reversal point but it depends on how the news unfolds as well. SM is likely to create buying pressure to fade the weak shorts before reversing down to test the low.

EU long levels:   1.3232, 1.3210, 1.3200, 1.3182 EU short levels:  1.3305, 1.3320, 1.3350

GU: The daily candle is a bear upthrust candle of near normal-spread (85pips) closing on near average volume >2days Note that price went below the breakout level of 1.5433 to trip stops before closing at 1.5445. The price action also included a 80pips spike during the NY session to 1.5510 and bounced off the ema200 at 1.5508. Although the daily candle is an upthrust and the volume seems to indicate selling, SM has literally cleared a route for a quick markup if required. With the forthcoming UK news today, it does create possibilities. Price is also close enough to the 1.5400 for SM to take stops below it. SM will likely create selling pressure perhaps to take stops below the 1.5400 key level before reversing upwards. Alternatively, if the news is not UK positive, we may well see further drop. Just because SM has taken out the weak shorts with the spike up does not mean that they intend to move up, it may well be that they want to minimize the number of herd on the downward move. After all, they have these peoples’ orders already.

GU long levels:  1.5426, 1.5400, 1.5385  GU short levels:  1.5500, 1.5535, 1.5575, 1.5600, 1.5650, 1.5670