DAILY REVIEW 4 Mar 2014

EU: The Daily candle is a small spread (66pips) bear “upthrust” closing off the low on high vol<1day. Technically, it is an “inside-day” candle.  The candle close and volume suggests more downside. Unchanged Levels of interest: Demand: short term-  1.3684 – 1.3676, 1.3668 – 1.3654,  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 1.3720 – 1.3738 currently. Background: “Although composite inflation data has been mixed as of late, Germany’s figures continue to come in slightly below expectations following the massive miss in October that drove the ECB to cut rates by 25 basis points. If little rhetoric is offered in regards to negative deposit rates or some quasi-legal bond purchasing framework, the Euro could continue to strengthen on the distorted fundamental front- especially in the context of broad based USD weakness against all but the commodity and emerging market currencies. On the bearish front, we must take note in regards to developments out of the Ukraine. Any serious military action (combined with some dovish ECB rhetoric) could help fuel broad based weakness in EUR crosses- especially in any EURJPY risk off move amid a strengthening Yen. – Daily Fx”. Basically, it tells us that SM is likely heading downwards only pull it back up. The double-speak in the report is typical of analysts who cover themselves “just in case”. The price action and chart analysis tell us what we need to know and we just trade the setups as they present themselves. Yesterday I wrote “SM will likely maintain selling pressure and remove weak longs to the 1.3725 level or a bit lower before resuming it’s northward  journey”, SM is likely to retest the low or around 1.3710 before resuming it’s upward journey.”

EU long levels: 1.3725, 1.3710, 1.3685, 1.3668, 1.3590, 1.3585, 1.3559 EU short levels: 1.3892

GU: The Daily candle is a normal spread (98pips) bear closing off the low on low vol<1day. The candle close and volume suggests more downside.  Unchanged 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- 1.6655, previous Asia low 1.6638, 1.6573 – 1.6555, 1.6514 – 1.6533, 1.6401 – 1.6490, 1.6354, 1.6330 – 1.6320, 1.6300 key level. The Asian range is 1.6639 – 1.6668 currently. SM pushed lower during Asia to 1.6639, just 1pip short of the 1.6638 level identified yesterday. Nothing really has changed except that with 2 UK news events coming up today and tomorrow, SM may use them to re-accumulate in a trading range before reversing northwards. SM is likely to continue the selling pressure before reversing upwards at the current low or maybe around the 1.6628 level.

GU long levels:  1.6639, 1.6628, 1.6655, 1.6645, 1.6638, 1.6575, 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 11.58 am EST