DAILY REVIEW 17 Feb 2014
EU: Weekly- the candle is a below average spread (152pips) bull closing off the high on low vol<5days. The candle close and volume suggests no buying pressure. The Daily candle is a small spread (40pips) bull “upthrust” on low vol<3days with daily volume divergence. The candle close and volume suggests more downside. Levels of interest(unchanged): Demand: short term- 1.3672 (Friday Asia low), 1.3600 – 1.3605 (Friday Asia breakout), 1.3590 – 1.3584 (daily trend-line 1.3580), 1.3563 – 1.3550 Supply: 1.3787 – 1.3818. The Asian range is 1.3692 – 1.3723. Prices gapped up about 18pips today and the gap has been closed. The daily pin bar looks like more and more of a bear trap and SM is likely to maintain selling pressure to around 1.3672 or lower and reverse back upwards after restocking new inventory from the weak longs and continue the northward journey. 
EU long levels:  1.3672, 1.3590, 1.3585, 1.3559 EU short levels: 1.3678, 1.3695, 1.3800

GU: Weekly- the candle is a large spread (373pips) bull closing just off the high on low vol<3weeks with volume divergence. The candle close suggests more upside but the volume is technically a No demand or “no buying pressure”. The Daily candle is a above-average spread (111pips) bull closing just off the high on low vol<3days with continued volume divergence. The candle close more upside and volume suggests No demand or “no buying pressure”. Levels of interest: Weekly/Daily supply level 1.6835 – 1.6845, 1.6860 – 1.6875, 1.6991 – 1.7015, 1.7025 – 1.7045 Demand:  short-term 1.6514 – 1.6533 (confluence H1 ema200), 1.6401 – 1.6490, 1.6354, 1.6330 – 1.6320, 1.6300 key level
The Asian range is 1.6745 – 1.6823. Most broker platforms report the highest level of shorts to date. However, the COT data seems to indicate that commercials have not really started shorting yet suggesting that even at the current demand level, GU may only be taking a breather as SM absorbs the shorts coming into the market. The likely scenario this week may be a reversal of GU backdown to the 1.6500 level to re-accumulate for a fresh assault on the 1.700 level.  The supply at 1.6745 level has been absorbed as SM gapped up over the weekend continued to the next supply level at 1.6822 where it seems to have reversed. Owing to the lack of retail longs in the market, SM is likely to continue to retest the current high or even to the next supply level at 1.6835 by maintaining buying pressure before reversing and taking profit downward to the 1.6500 level.
GU long levels:  1.6514, 1.6400, 1.6354, 1.6440, 1.6300 GU short levels:  1.6823, 1.6835, 1.6860, 1.7000, 1.7030

Posted at 3.57 am EST