DAILY REVIEW 10 Oct 2013

EU: The Daily candle is a wide spread (119 pips) bear closing about ½ off the low on above-average vol>14days. The close and volume suggests that SM bought into the candle lows and suggests possible upside.   The Asian range is 1.3487 – 1.3527 with TR 1.3485 – 1.3535, H4 TR is 1.3461 – 1.3645. To bring more focus to the levels, H4 TR can be seen as Lower (TRL): 1.3461 – 1.3520 Upper (TRU): 1.3521 – 1.3645 Notable levels for potential long/short trades will be stopruns at these levels. However, there will be other manipulation levels in-between. H1 candles that close into each boundary will provide the intraday directional bias. FOMC day never ceases to surprise and especially so with the US impasse being the fuel for SM with all kinds of rumours. Yesterday, I noted that “A H1 close below the TR low of 1.3537 would likely see more downside”. SM is likely to take this period to either accumulate or distribute while the powers that be attempt to get their act together. SM is likely to create selling pressure and may or may not spike yesterday’s low as doing so will probably release many traders that are trapped short. In the event that they don’t, and they may not need to because the low was created by a news spike and it is unlikely that many would have hopped on for a long and by going low enough, many will have their orders taken out earlier as these traders cover their positions and SM gladly buys it off them. In this more likely scenario, they will then reverse to fade the shorts before ending the day with or without a larger push back down. Apart from some manipulation levels that have confluence with Fibs, supply/demand levels, looking for trades at the TRL and TRU will probably provide good entries. In case of tapebombs, a H1 close below 1.3561 will likely see more downside.  

EU long levels:  1.3485, 1.3462, 1.3355, 1.3270 EU short levels:  1.3520, 1.3535, 1.3553, 1.3575, 1.3600, 1.3631, 1.3655, 1.3670, 1.3700, 1.3715

GU: The Daily candle is a ultra-wide spread (206pips) bear closing ¼ off the low on above average vol>5days. The candle close and spread suggests more downside but slowing momentum. The Asian range is 1.5913 – 1.5964 The TR is 1.5913 - 1.5985 Note that price has already broken yesterday’s low and we have continuing bullish volume divergence on H1. After the monster news-induced move yesterday, this overstretched “rubberband may be reaching it’s limits soon and a retracement my well yield a tidy return. Notable:  H1 ema800 (also H4 ema200) @ 1.5901 confluence with key level 1.5900 slightly below which may be a stop hunt area for SM. Next is 50%Fib 1.5860 confluence with trendline support and Gap close level @ 1.5872 SM is likely to maintain selling pressure to fade weak longs possibly to around 1.5880 before reversing back up.  A H1 close below 1.5850 will likely see more downside.

GU long levels: 1.5900, 1.5880, 1.5850 GU short levels: 1.5964, 1.5985, 1.6000, 1.6120, 1.6155, 1.6180, 1.6197, 1.6226, 1.6240, 1.6259, 1.6320, 1.6353, 1.6380