DAILY REVIEW 15 Aug 2013

EU: Daily candle is a small-spread (41pips) bear narrow-body spinning top closing on below-average vol<1day. The volume and the close suggests no selling pressure. As I write, SM has opened up the Asia range by creating buying pressure. Although longs have increased, the market remains a short bias on open orders. H6 candle close and vol suggests SM fading to remove weak shorts. With the previous week’s low already tested, SM has taken out weak longs after 4 days of bear candles. Logic implies that there would be no reason for SM to go back down all the way to retest the low at 1.3232 since orders there have already been taken by them. The probable SM play today would be to create buying pressure to remove weak longs, reverse to pick up new shorts (many herd traders are short) especially from the 1.3310 level identified yesterday and create selling pressure before reversing upwards to retest 1.3322, 1.3345 and even 1.3400 as all are well within reach. We have a slew of news from the UK and the US today so SM will have all the fuel they need. It is not illogical to short at the identified higher levels if we have a valid setup but my guess is that with the “do we”/”don’t we” on QE reduction from the FED, SM will move higher to stop out the majority of the current shorts, perhaps up to 1.3450 – 1.3500

EU long levels:   1.3260, 1.3245, 1.3232 EU short levels:  1.3320, 1.3350, 1.3400, 1.3450, 1.3510

GU: The daily candle is a bull candle of normal-spread (124pips) closing 1/3 off the high on average volume >1day Yesterday I wrote “SM has literally cleared a route for a quick markup if required” – and they did with the good UK news. Price action yesterday has taken both weak shorts and weak longs out of the market. Price is still quite far from the supply level so now that SM has created a huge pin to the upside on H1 in Asia, I believe that SM will maintain the selling pressure to remove the weak longs, especially those who jumped in on the retracement to the 1.5500 key level to at least take them out before reversing upwards.

GU long levels:  1.5482, 1.5462, 1.5445, 1.5430  GU short levels:  1.5545, 1.5575, 1.5600, 1.5650, 1.5675