Wednesday, 21 August 2013

DAILY REVIEW 21 Aug 2013
EU: The Daily candle is a wide-spread (129pips) bull closing about 1/4 off the high on above-average vol>2days. Technicals: Supply levels: 1.3449 – 1.3520 (was from retest of breakout level, 2nd retest, confluence with Fib Extension 161.8%@1.3519),  1.3575 – 1.3600, 1.3670/1.3695 – 1.3710 (confluence with Fib Extension 261.8%@1.3714). Price has reached past 1.3450 and within range of the supply at 1.3480 – 1.3520 as well heading into the FOMC but with news being what it is, we have the possibility of the higher supply coming into play as well. The Broker platforms show a further increase in short positions. We are close enough to the supply levels where there potentially huge orders stacked and would be a potential full reversal level bearing in mind that any statement from the FOMC stating the reduction of QE is going to move prices and there may be contradictions and clarifications causing whipsaw, setups at/close to the levels will give the potentially best and safest trades. The daily close is now with bearish volume divergence close to the supply level so SM is likely create buying pressure to fade the weak shorts, then create selling pressure to remove weak longs/induce sellers and then reverse back to test at least the first level of supply.
EU long levels:   1.3400, 1.3375, 1.3353  EU short levels:  1.3450, 1.3485, 1.3515, 1.3575, 1.3600, 1.3695, 1.3710


GU: The daily candle is a small-spread (67pips) bull spinning top closing on below-average volume >1day (no demand) with continued daily bearish volume divergence for 3days. Technicals: supply levels 1.5721/1.5733 – 1.5750 (confluence Hourly Fib Extension 161.8% @1.5721), 1.5780 - 1.5806 (confluence daily Fib Extension 161.8% @ 1.5818), 1.5843 – 1.5877 (daily ema800 @ 1.5890) Broker platforms indicate that there is a further increase of traders going short. Note that the daily candles are getting smaller and smaller in spread and yesterday’s candle is small spread on slightly higher volume. This is a definite sign of a “topping formation” forming. However, price has not retested the supply at 1.5750 yet and presents a good way for SM to induce shorts before going long to test. SM will likely remove weak longs probably by spiking Asia high before reversing to create selling pressure to reload inventory before pushing up again. We do have some UK news and US news prior to FOMC so SM will have fuel enough to position the prices.
GU long levels: 1.5620, 1.5600, 1.5580, 1.5555  GU short levels:  1.5694, 1.5727, 1.5750, 1.5780, 1.5815, 1.5850, 1.5885

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