DAILY REVIEW 16 Oct 2013
EU: The Daily candle is a normal spread (92 pips) bear closing about 1/2 off the low on average vol>3days. The candle close and volume suggests SM buying into the candle. The H4 TR is unchanged 1.3461 – 1.3645 with the Lower (TRL): 1.3461 – 1.3520 Upper (TRU): 1.3521 – 1.3645 The Asian range is 1.3505 – 1.3530 A leading broker states, “The trading crowd has grown less net-short from yesterday and last week”. The longer that price holds above 1.3461 which is about August highs and late-September/post-FOMC swing lows, the herd will likely become less short and more long. The seemingly logical direction would be to simply fade the longs or is it? Although longs have increased, shorts are still the majority and the path of least resistance is still northward. Given the impasse in the US and news of “impending deals”,  SM is likely to create selling pressure to fade weak longs perhaps to the 1.3490 level before reversing back for the push back up again. One has to be mindful that the price spike yesterday was news of Fitch placing the US’s AAA rating on “watch”. Fitch usually precedes the bigger boys like Moody’s and just a whiff of such news will cause even larger swings as the bigger dog wags its tail. Although I don’t see price closing and diving below the TRL 1.3461, shorts near the top and longs near the bottom will likely provide the better trade setups. A H1 close below 1.3461 will likely see more downside.  
EU long levels 1.3490, 1.3478, 1.3462, 1.3355, 1.3270 EU short levels: 1.3535, 1.3575, 1.3600, 1.3631, 1.3655, 1.3670, 1.3700, 1.3715


GU: The Daily candle is a normal spread (94pips) bull hammer on average vol>3days. Taken in context, the candle tested and came off the TR low so the close and volume suggests buying into the candle. However, prices stalled once again and failed to close above the TR high so it could be a short trap to induce more shorts again before dropping. The Asian range is 1.5965 – 1.5999, pretty much the same as yesterday. Price is still within the TR of 1.5913 - 1.5985 As noted, price still failed to hold above the key 1.6000 handle yesterday but SM finally closes and covered the gap at 1.5947 A broker states, “The trading crowd has grown further net-short from yesterday” which suggests SM is likely to head upward again for inventory reload if they want to push further downward. A H1 close above 1.6000 may see more upside as more supply at this level would likely have been absorbed yesterday and a H1 close below 1.5850 will likely see more downside. SM is likely to maintain selling pressure before reversing upwards to retest the key 1.6000 level.
GU long levels: 1.5935, 1.5920, 1.5900, 1.5880, 1.5850 GU short levels: 1.6000, 1.6120, 1.6155, 1.6180, 1.6197, 1.6226, 1.6240, 1.6259, 1.6320, 1.6353, 1.6380