DAILY REVIEW 4 Sep 2013

EU: The Daily candle is a small spread (59pips) bear closing 1/2 off the low on below-average vol>1day. Price spiked lower on very good US ISM data and stopped just short of the 22 Jul 2013 open before SM faded the herd. The close and volume normally indicate SM buying but price is still within striking distance of the key level 1.3100 level and even the 1.3061 demand/breakout level. The likelihood is a test for supply at yesterday’s low at 1.3137 but an hourly close below it will likely see it push down, this is a significant level as it is also a week low so a push below it is likely to continue. Broker platforms show that net short positions have decreased which suggests that longs have increased so there will be a fading of weak longs before SM reverses. Combine this with the news that President Obama has obtained approval for a limited strike on Syria, this suggests that we will likely see sentiment supporting the move down. SM is likely to create buying pressure during Asia before reversing to create selling pressure to fade the weak longs and reverse upwards, where the reversal will happen depends on where we see price-volume setups/stop runs. With NFP tomorrow, there is a possibility to see price being-positioned today.

EU long levels:   1.3138, 1.3100. 1.3061  EU short levels:  1.3200, 1.3258, 1.3300

GU: Same as yesterday, the Daily candle is near-normal spread (81pips) bull spinning top (with a longer up wick) closing on below-average vol>2days. The candle close and volume suggests no buying interest but the Gap up opening on Monday is still valid and a further push upward is expected. The likely SM move will be to create buying pressure to remove weak shorts possibly to the 1.5605 level or a bit more and then selling pressure to fade the weak longs and then reverse up again. This is a bit tricky as EG reaches the demand level. SM may actually push EU up and GU down so it is best to be really careful.

GU long levels: 1.5525, 1.5516, 1.5500, 1.5480, 1.5420 GU short levels: 1.5582, 1.5605, 1.5628, 1.5687, 1.5711