DAILY REVIEW 4 Oct 2013
EU: The Daily candle is a below-average spread (69pips) bull closing 1/3 off the high on above-average vol<2days with continued bearish volume divergence. The candle indicates “no demand” but the above average volume suggests more upside to test weekly supply at the 1.3700 level. The herd has continued to pile on short positions as brokers report further increase in net short positions. Technicals: 161.8 Fib Extension @ 1.3665 confluence with 1.3655 – 1.3670, M15 ema200 1.3594 confluence with short term demand 1.3590 The Asian range is 1.3617 – 1.3631 Whilst there is daily bearish volume divergence, the spread and level of assumed stall does not add up. SM did their vacuum cleaning again yesterday sweeping up and down and back up again. With prices close to 1.3700 with delicious orders sitting above, it will be very tempting to resist. It is a high probability that supply is still intact at this level and a reversal or at least a strong reaction from here is possible. With the NFP unknown till a solution is found to the impasse in the US, SM will likely push test supply and position prices for a fall in anticipation of a US resolution (what a game!). The trading range has been established 1.3615 – 1.3645 The likely SM move will be to create buying pressure to induce shorts before reversing upwards to test/breakthrough the highs but be mindful that being Friday, they may actually whipsaw up and down before taking off. One leading broker reports that “retail traders have been net-short Euro since it crossed above $1.29 in July”, ouch…. that must really hurt…..
EU long levels:  1.3615, 1.3607, 1.3590, 1.3570, 1.3548, 1.3520, 1.3505 EU short levels:  1.3655, 1.3670, 1.3700, 1.3715


GU: The Daily candle is a normal spread (87pips) bear closing at the low on average vol>1 day. The candle close and volume suggests more downside. With yesterday’s close at 1.6153, technically we have seen a lower low than yesterday, we also note that SM has actually stop hunted Wednesday’s low. The Asian range is 1.6152 – 1.6177 The TR is 1.6152 - 1.6179 One broker reports “The trading crowd has grown less net-short from yesterday but further short since last week”.  So as expected, SM gobbled up some weak longs yesterday and against conventional wisdom may turn back up today or simply stall and bounce up and down in the TR looking to drop and picking up more shorts before they head upward. In the event that SM stophunts the TR lows, a H1 break and close below 1.6127 will see more downside and a pullback to breakout short entry (with setup) can be considered. Another possible play could be SM pushing prices up to the 1.6190 - 1.6200 level, a stophunt or other clear setup hear may also make a for a decent 40pip trade or so. Again, I am no clairvoyant and do not have a crystal ball, it is Friday and SM will dance, let’s just keep our feet out of their way. A leading broker reports that “crowds have been short since the GBP crossed above $1.52 in August”, double ouch….. that must hurt just as bad……
GU long levels:  1.6152, 1.6135, 1.6127, 1.6070, 1.6037, 1.6025 GU short levels: 1.6185, 1.6197, 1.6226, 1.6240, 1.6259, 1.6320, 1.6353, 1.6380