DAILY REVIEW 13 Sep 2013

EU: The Daily candle is a below-average spread (70pips) bear hammer on high vol>3days. The price action was an “inside day” of Wednesday’s candle. SM used the good US News to spike lower to take stops all the way to 1.3254 before reversing to spike the high and now reversing back downwards to move back in direction of the news fading a lot of retracement long traders. It is a typical SM vacuum cleaning move which paves the way for them to do a quick mark-up later. The candle pattern suggests a reversal but price is still in no man’s land close enough to the supply levels above. The close indicates more up is possible and the volume suggests that SM has been buying. The down move since the high has been on low volume, typical of a SM mark-down as they re-stock inventory for the push back up. SM is likely to continue the selling pressure continuing to fade the weak longs before reversing back up. The main Euro and US news later will determine the extent of the moves.

EU long levels:   1.3265, 1.3250, 1.3233, 1.3211-20, 1.3200  EU short levels:  1.3323, 1.3338, 1.3375, 1.3400, 1.3425, 1.3451

GU: The Daily candle is a below-average spread (64pips) bear spinning top closing on vol>3days with continuing bearish volume divergence. The candle pattern suggests a reversal is in order but with the supply levels already reached and the expected push up by EU, it is a possibility that SM will push up to 1.5880 or even the 1.5900 level. However, with price at the current daily supply level, I would look for a stoprun to yesterday’s high or clear H4 bearish volume divergence to consider a short setup/entry. The current SM selling pressure in fading the weak longs is underway and they will likely test yesterday’s low or even lower before reversing upwards. Background from yesterday is good UK news/data for SM to spike up during the London session only to perform the same vacuum cleaning process as the EU. So there is every reason to anticipate further upside at this juncture although being Friday, we will need to be very careful as SM closes out the week, they will want to book some profits and there may be similar whiplash moves. A close above 1.5825 will open the next imbalance/breakout level at 1.6000

GU long levels: 1.5770, 1.5745, 1.5720, 1.5700, 1.5680, 1.5665, 1.5640  GU short levels:  1.5838, 1.5920, 1.5950, 1.6000