DAILY REVIEW 26 Aug 2013

EU: Weekly: Bull candle is a small spread (154pips) bull closing ½ off the high on below-average volume with weekly bearish volume divergence. The Daily candle is bull spinning top closing on below-average vol<3days which suggests no demand. Technicals: weekly ema200: 1.3295 daily ema200: 1.3291 61.8%Fib: 1.3335 78.6%Fib: 1.3503 13 Feb 2013 High 1.3519 88.6%Fib: 1.3600 Daily Supply Area: 1.3577 – 1.3600, 1.3670/1.3690 – 1.3720 It looks like the bulls have absorbed the supply and are now positioned to push toward the next daily supply level of 1.3577 and higher. However, we have a weekly bearish divergence to consider now that price is still within the earlier supply level of 1.3390 – 1.3450 and the range of the weekly candle has also reduced. After inducing and then taking out all the weak longs last week, it makes no sense for SM to do a sudden drop by immediate distribution. What is more likely to happen is for SM to create buying interest upward to test the 1.3450 and take stops before reversing or even push higher to the 1.3500 key level where they last manipulated the previous day high at 1.3519 before a full blown reversal.  SM is likely to create selling pressure to fade the weak longs, then reverse to create buying pressure before the possible reversal downward.

EU long levels:   1.3363, 1.3346, 1.3320  EU short levels:  1.3400, 1.3450, 1.3500, 1.3520

GU: Weekly: Bear upthrust normal-spread (100pips) closing near low on below-average volume <3days. The daily candle is a normal-spread (99pips) bear closing 1/3 off the low on below-average volume <2days suggesting no selling pressure. However, the weekly upthrust tells us that the downward reversal is likely underway and the daily is likely to be a pause for SM to reload inventory as they top out and then move down. Technicals: daily ema200: 1.5516 38.2% Fib: 1.5420 daily demand: 1.5435 – 1.5420 Beginning from the daily bearish divergence seen last Wednesday, the downward move is likely to continue pushing to at least to test the 1.5435 area. SM actually took stops above and below the 12hour range identified last Friday and are headed south. SM will likely create buying pressure to remove weak shorts before reversing back down.

GU long levels: 1.5520 GU short levels:  1.5595, 1.5628, 1.5655, 1.5690, 1.5715