DAILY REVIEW 17 October 2014

EU Analysis:

EU: Daily- The candle is a large spread (139pips) bear hammer closing on ultrahigh vol<1day. The candle close and volume suggests a lack of selling pressure and possibly more upside. Levels of interest: Demand: short-term  1.2740 (Monthly ema200), 1.2724, 1.2700, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2845. Background: A fundamentally weak Euro vs a FED playing a wait and see strategy. I expected SM to induce more shorts and they pushed down to 1.2705 before reversing back upward effectively removing all weak shorts. Price action is as expected as SM need to rebuild inventory before resuming the SM retracement uptrend that will target the 1.2950 level and higher. SM is likely to create selling pressure to the 1.2720 level or lower to the 1.2700 level before reversing. Any close below 1.2700 will negate the analysis.

EU long levels: 1.2740, 1.2720, 1.2700

EU short levels: 1.2886, 1.2900, 1.2950

GU Analysis:

GU: Day- The candle is a large spread (155pips) bull closing just off the high on ultrahigh vol>2000days. A check of futures volume shows that real volume, lathough high has is lower than yesterday. This being the case, since the increased activity resulted in less real volume plus the fact that the tick volume was higher on less spread, compression had taken place. Taken together, the candle close and volume suggests more upside but with daily volume divergence (on real volume) and a possible reversal back into downtrend continuation. Demand: Weekly/Daily:  1.5850 Supply: Short term: 1.6400, 1.6492, 1.6523 Yesterday I wrote "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" Price has pushed higher in Asia to 1.6108 and we can expect SM to push to retest the Asia high 1.6108 or higher before reversing to resume the downtrend to test the 1.5853 pivot".  

GU long levels: 1.5853 
GU short levels: 1.6108, 1.6225, 1.6400, 1.6492, 1.6523 

Posted at 04.37 am EST