DAILY REVIEW 16 Sep 2013

EU: The weekly candle is a below-average spread bull closing slightly off the high on vol <36 weeks. Price has closed at the weekly ema200 @ 1.3292 Technicals: Daily (1Feb – 27Mar) 78.6%Fib @ 1.3505 88.6%Fib @ 1.3600 Current Daily supply levels: 1.3425 – 1.3450 Next Daily supply levels: 1.3512 – 1.3527, 1.3620 – 1.3636, 1.3703 – 1.3711  The Daily candle is a below-average spread (68pips) bear candle with wicks to the top and a slightly longer bottom wick on high vol>4days. The price action was an “inside day” of Thursday’s and Wednesday’s candle. The candle close suggests that there is no selling interest and the volume suggests that SM has bought into the upmove at the end of last Friday after sweeping almost the whole trading range of last Thursday. This kind of price action on bear candles would normally suggest a build up of selling pressure but the price action and candle close the past two days suggest accumulation instead. Confirming this, price opened with a gap up of 59pips. SM is likely to continue the buying pressure  to suck in more shorts probably by taking price to 28Aug high at 1.3397 or even break above to take breakout traders’ orders around the 1.3400 key level before reversing to selling pressure to fade the weak longs and spike the Asia low (today’s open) before reversing back up. Closing the gap is a possibility but will depend on the news. We may see this move as ECB’s Draghi is speaking today during London session. With the FOMC later this week, I would expect SM to push further up before the anticipated QE “tapering” news possibly when prices are at or close to the supply levels.

EU long levels:   1.3350, 1.3265, 1.3255  EU short levels:  1.3400, 1.3425, 1.3451, 1.3498, 1.3508, 1.3525

GU: Weekly: The candle is a normal spread (271pips) bull candle closing nearly at the high on below average vol >2days with bearish volume divergence. The Daily candle is a normal spread (108pips) bull closing just off the high on vol<2days with continuing bearish volume divergence. With the length of the candle and candle close, higher prices can be expected in spite of the bearish volume divergence. Technicals: Daily supply 1.6170 – 1.6180, 1.6360 – 1.6380 261.8% Fib Ext @ 1.6184

Price also gapped up 59pips and with the next significant supply level at around 1.6150 and higher, I expect SM to take stops above the 1.6000 key level as it is almost a certain stop-hunt location for the fading of weak longs before a push back up. It will also be an excellent level from which to create a herd sell-off to close the gap before the next push up.

GU long levels: 1.5926, 1.5860, 1.5825  GU short levels:  1.6000, 1.6015, 1.6088, 1.6110, 1.6175