DAILY REVIEW 16 October 2014

EU Analysis:

EU: Daily- The candle is a ultra large spread (262pips) bull large body spinning top closing off the high on ultrahigh vol>327days. The candle close an volume suggests more upside. Levels of interest: Demand: short-term  1.2740 (Monthly ema200), 1.2724, 1.2680, 1.2635, 1.2614, 1.2568, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2800, 1.2820, 1.2840. Background: A fundamentally weak Euro vs a FED playing a wait and see strategy. Fear reared its head in equities market causing a sell-off and resulted in a super duper spike of 262pips clearing out all supply right up to 1.2886 before profit taking! Yesterday I wrote "Taking a closer look at the daily volume, the increase in volume has not resulted in a proportionate spread yesterday, this would suggest price is starting to become compressed and may reverse" except that SM reversed without retesting the Asia pivot low. SM has taken lots of profit at the highs based on the huge volumes going up and not really spending that much time there. SM has likely taken out weak longs. The H4 candle looks extremely bearish with the ultrahigh upthrust from yesterday and will invite traders chasing price to continue the downtrend. SM will continue to induce more shorts past the H1 pivot 1.2770 to the 1.2740 level or lower before reversing back into the new SM retracement uptrend that will target the 1.2950 level and higher.

EU long levels: 1.2740, 1.2724, 1.2680, 1.2635, 1.2614, 1.2568, 1.2500

EU short levels: 1.2886, 1.2900, 1.2950

GU Analysis:

GU: Day- The candle is a ultralarge spread (194pips) bull closing 1/5 off the high on ultrahigh vol>2000days. Since tick volume is activity, a double check on  The candle close and volume suggests more upside but there is very significant selling going on. Since tick volume is buy/sell activity we checked GBP futures daily volume and confirm that the volume is highest in 17 days and confirms the selling analysis. Demand: Weekly/Daily:  1.5850 Supply: Short term: 1.6400, 1.6492, 1.6523 Yesterday I wrote "the likelihood is for a news move down as the vehicle for SM to collect orders below, particularly if they test the 1.5950 level." SM stopped short at 1.5874 and reversed from there instead spiking to a high of 1.6068 before fading weak longs. SM has cleared the entire 194 pips range up and down and is likely to induce longs up to yesterday's high 1.6068 or higher before reversing to continue the downtrend to test the 1.5853 pivot.  

GU long levels: 1.5853 
GU short levels: 1.6055, 1.6068, 1.6110, 1.6225, 1.6400, 1.6492, 1.6523 

Posted at 04.46 am EST