DAILY REVIEW 10 October 2014

EU Analysis:

EU: Daily- The candle is a large spread (127pips) bear upthrust closing off the low on ultrahigh vol>322days. The candle close and volume suggests more downside but a bear trap may be in place.  Levels of interest: Demand: short-term  1.2640, 1.2614, 1.2568, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2800, 1.2820, 1.2840. Background: Fundamentals make for a weak Euro but the FOMC has deferred rate hikes with fears of a strong dollar affecting exports in the face of a slowing global economy and inflation missing its 2% target. So it seems like we have both sides trying to influence the market. Having said that, one of the broker states that "retail trader data shows that ‘the crowd’ recently turned net-short EURUSD for the first time in nearly 1000 pips and three months". This suggests that the SM will want to take out these traders' orders before resuming the downtrend. This also supports my statement yesterday that "one must take into account the fact that SM must start to oscillate up and down to distribute before reversing the move". Prices in Asia have already pushed lower. SM is likely to push out weak longs to around the 1.2640 (previous NY session low) or lower before reversing upward to test the current pivot high of 1.2790 and possibly push to 1.2800 - 1.2825 level before reversing. 

EU long levels: 1.2640, 1.2614, 1.2568, 1.2500

EU short levels: 1.2800, 1.2825, 1.2875, 1.2900, 1.2925

GU Analysis:

GU: Day- The candle is a normal spread (122pips) bear "pseudo upthrust" closing on very high vol<1day. The candle close and volume suggests more downside but there is a slowing in selling pressure. Demand: Weekly/Daily:  1.5900, 1.5850 Supply: Short term: 1.6400, 1.6492, 1.6523 Prices have moved lower post-FOMC in line with USD strength but still not anywhere near structure levels, it is better to leave it alone. 

GU long levels: 1.6050, 1.5870 
GU short levels: 1.6400, 1.6492, 1.6523 

Posted at 07.15 am EST