DAILY REVIEW 27 Aug 2013

EU: The Daily candle is a bear spinning top closing on very low vol<64days which suggests no selling pressure. Perspective: we are coming to the end of August now and the previous month candle was a bull closing just off the high with average vol <6 months which suggests buying by SM from the retest of the monthly spring at 1.2750 level. Yesterday’s price action and volume suggests an unwillingness to allow price to fall and that the SM is poised to push prices to test the 1.3450 and higher to test the 13 Feb 2013 high at 1.3519. Broker platforms still show a majority of short open positions with the path of least resistance to the north with orders stacked at the usual “suspects” around 1.3450 and 1.3500. SM can easily reach and exceed these levels given the right kind of news. Price has been inside Friday’s price action so to generate interest, SM is likely to create selling pressure to induce shorts before reversing back upwards. We must bear in mind that we have a weekly bearish divergence in play and that it may top out and reverse once these levels are tested without actually going further to 1.3600 this month.

EU long levels:   1.3363, 1.3346, 1.3320  EU short levels:  1.3408, 1.3450, 1.3500, 1.3520

GU: The daily candle is a small-spread (55pips) bull pin bar closing on low volume <64days suggesting no buying interest. However, even though the reversal is likely already underway, the daily ema200 of 1.5538 sits closely below and may see some reaction. SM is likely maintain selling pressure to around the 1.5538/1.5520 level , bounce to fade weak shorts and resume then the downward move to at least to test the 1.5435 area.

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