DAILY REVIEW 6 Sep 2013

EU: The Daily candle is a normal spread (113pips) bear closing just off the low on above-average vol>14days. Price has stalled at the daily 50% Fib close to the 1.3100 key level. The close and volume suggests more downside. Technicals: 30 Aug 2013 high@1.3254 confluence with backside of trendline test.  Daily 38.2%Fib@1.3187 confluence with 3 Sep 2013 high@1.3196 and key level@1.3200 Daily Breakout test at 1.3169 – 1.3156 Daily ema200@1.3057 (also test of demand at intermediate spring 1.2990 – 1.3108). Broker platforms show that shorts have reduced and longs have increased. The relatively positive US news coupled with Draghi’s comments that they had met to discuss cutting interest rates plus the Syrian crisis still looming in the background lends strength to the USD and also promotes a risk-averse sentiment that is confirmed by price action and volume. I would expect that weak shorts have been taken out of the market by the upmove yesterday prior to the move down. As NFP looms large today, I expect that good US news will likely see immediate strength in the USD. However, poor data may result in SM pushing prices up to near supply levels before reversing downward to follow sentiment. SM is likely to create buying pressure to fade the weak longs prior to the news. Many traders will expect an immediate short but I believe that SM may whip it up at release and then reverse. It will be really strange if yesterday’s low is not broken.

EU long levels:   1.3100, 1.3090, 1.3061, 1.3000, 1.2962, 1.2870  EU short levels:  1.3555 (DPP), 1.3169, 1.3200, 1.3217, 1.3258

GU: The Daily candle is a normal spread (106pips) bear spinning top closing on very high vol>5days. The candle close and volume suggests no selling interest and buying, therefore more possible upside. Technicals: 68.1%Fib@1.5780 potential daily supply level @ 1.5800 – 1.5820 Yesterday, I warned that GU testing the supply levels beyond 1.5700 is still possible but to be careful of manipulation as EG reaches the demand level of 0.8400 – 0.8390 and what could happen if there is no real USD weakness.  If there is USD strength, the buying of USD will also cause the GU to lose ground and even more so when if EU starts to fall with USD strength as the largest volumes are there. This being said, there will be a real opportunity to short GU at the daily supply levels 1.5720-50 or even up the next level at 1.5800- 1.5820 depending on the news. Broker platforms do indicate a higher percentage of traders short. The likely SM move will be to fade the weak shorts by creating buying pressure before reversing downwards prior to the NFP. Finally, today is Friday and so we can expect whipsaws with NFP.

GU long levels: 1.5573, 1.5525, 1.5516, 1.5500, 1.5480, 1.5420 GU short levels: 1.5665, 1.5687, 1.5711, 1.5720, 1.5750, 1.5780, 1.5800, 1.5820