DAILY REVIEW 3 Oct 2013

EU: The Daily candle is a normal spread (102pips) bull spinning top closing on above-average vol>9days on continued bearish volume divergence. Price had broken decisively out of the TR and closed above the monthly open of 1.3575 of 1 Feb 2013, this is significant because this is the “launch pad” from which the last attempt to test supply at the 1.3700 level failed and becomes a high probability reversal area.SM used the huge daily pin bar to suck in shorts and used Draghi’s speech to springboard and swallowed them all. One broker platform declares “Short positions are near record highs as they are higher than yesterday and above levels seen last week”.  The candle close and volume suggests more upside and it has already happened as prices pushed higher early and the Asian range is 1.3576 – 1.3622 SM has taken out many shorts and is now closer to 1.3700 weekly supply level which if tested will be the first time since 1 Feb 2013. Being the first time, it is likely that supply is still intact at this level and the probability of a reversal or at least a strong reaction from here is more probable. With the forthcoming NFP tomorrow, whether it happens or not owing to the continued impasse in the US, SM will likely still position prices in the opposite direction of the intended move and marking up would be in line with the technical trend. A clear trading range has been established 1.3575 – 1.3622 and with the H1 pin bar in place, the likely SM move will be to create selling pressure to fade weak longs and induce shorts before reversing to test the highs but be mindful that they may also spike the high or push up a little to stophunt and then drop to create the selling pressure. No matter what they do, only take trades at the edges or outside the TR to minimize risk.  Should H1 see price close above 1.3710, it will probably see more upside as supply is exhausted. Technicals: 161.8 Fib Extension @ 1.3665 confluence with 1.3655 – 1.3670

EU long levels:  1.3575, 1.3548, 1.3520, 1.3505, 1.3460  EU short levels:  1.3655, 1.3670, 1.3700, 1.3715

GU: The Daily candle is a normal spread (88pips) bull spinning top closing on average vol<1 day. Key level to pay attention to is the 1.6300 weekly supply level which has been tested 4 times already which suggests that it may not have sufficient supply remaining to stop demand pushing through. This lines up with the Monthly candle closing at the high on low volume that suggests a bulk of SM mark up rather than a herd driven push. The Asian range is 1.6161 – 1.6199 The price action yesterday suggests accumulation and the accumulated 2 price-volume picture shows bearish volume divergence as price reaches supply. Prices are well within reach of the weekly supply levels and having come this far, the shorts look too tempting to resist for SM. One broker platform writes “The trading crowd has grown less net-short from yesterday and last week” which is strongly indicative of crowd behavior. SM would likely fade more longs before using the crowd to jump back in on buying pressure. The clearly defined TR is 1.6129 - 1.6259 With lots of longs already in the food chain of the SM, we can expect deeper pullback before an up move. SM is likely to create selling pressure to fade the longs before reversing upwards.

GU long levels:  1.6142, 1.6111 - 1.6105, 1.6077, 1.6037, 1.6025 GU short levels: 1.6259, 1.6320, 1.6353, 1.6380