DAILY REVIEW 5 Sep 2013

EU: The Daily candle is a small spread (61pips) bull closing just off the high on below-average vol<1day. The close suggests more upside but the volume indicates a likely move down before that happens. Broker platforms continue to show that longs have increased so there will be a fading of weak longs before SM reverses. With the Syrian crisis in the background and NFP later today, SM may want to book in profits by taking out the majority of trapped shorts before the push down once military action commences thus we will likely see EU pre-positioned lower but not exceeding the week’s low (as SM will not want to release too many of the trapped short traders) for a possible move in the opposite direction. My guess is those that are trapped short may believe that it will be a full-blown risk-aversion and hold on instead of getting out (Oanda platform shows some short positions even below 1.2800). SM is likely to create selling pressure to fade the weak longs and reverse upwards either prior-to (to lure more shorts) or with the NFP release due tomorrow.

EU long levels:   1.3170, 1.3156, 1.3138, 1.3100. 1.3061  EU short levels:  1.3217, 1.3258, 1.3300, 1.3325, 1.3340, 1.3371

GU: The Daily candle is a normal spread (93pips) bull closing just off the high on below-average vol<1day. The candle close and volume suggests more upside but the likely SM move will be to create selling pressure to remove weak longs possibly to the 1.5580 level or even lower and then reverse up again. This may even see GU testing the supply levels beyond 1.5700 so we will have to be careful of manipulation as EG reaches the demand level of 0.8400 and if there is no real USD weakness, SM may push EU, EG and cause GU to drop like a stone. Broker platforms still show a net short position so we know SM will usually go where the majority of stops are located with the least resistance as long as the news enables them to do so. 

GU long levels: 1.5580, 1.5525, 1.5516, 1.5500, 1.5480, 1.5420 GU short levels: 1.5650, 1.5687, 1.5711, 1.5720, 1.5750