DAILY REVIEW 2 October 2014

EU Analysis:

EU: Daily- The candle is a small spread (56pips) bear hammer closing on high vol>7days. The candle close and volume suggests buying but with more downside. Levels of interest: Demand: short-term 1.2570 Daily/Weekly: 1.2034 Supply: short-term: 1.2634, 1.2653, 1.2661, 1.2690, 1.2740 (monthly ema200). Background: The German rates and yields being held negative out to 4 years. Price has taken out weak shorts as analyzed to the 1.2674 level and currently moving back downwards as we approach the ECB rate decision followed by press conference later today.  SM usually positions prices against the direction. What is the implication of a rate decision? It is part of fundamentals. But what can we expect? Raise rates, keep rates or cut rates? They already cut the interest rate last month... Will they raise it this month? Unlikely isn't it? So that puts paid to a sharper fade upward. How about cut? Then this will be the fuel for the continuation down and will be strong given the fundamental of negative yield on German bonds. How about hold rates? It will also result in the down continuation, usually again after SM positions it higher and wrong-footing the herd which they are already doing. SM is likely to drive prices to 1.2720 or higher before reversing to continue the downward movement.

EU long levels: 1.2570, 1.2034

EU short levels: 1.2690, 1.2740, 1.2782, 1.2800 

GU Analysis 

GU: Day- The candle is a normal spread (89pips) bear spinning top closing on low vol<1day. The candle close and volume suggests more downside. Demand: Weekly/Daily:  1.5870, 1.5850 Short term: 1.6350, 1.6320, 1.6248, 1.6058 Supply: Short term: 1.6620, 1.6185, 1.6230 (Gap), 1.6320 (Gap close) Supply Short Term: 1.6415, 1.6475, 1.6505, 1.6550, 1.6585, 1.6600, 1.6622 Nothing has changed and there really is no clear level to trade from at the moment. The only places worth looking for a trade would be the pivot high at 1.6523 and pivot low at 1.6161 The immediate to longer term bias remains short at the moment.

GU long levels: 1.6050, 1.5870 
GU short levels: 1.6523, 1.6585, 1.6600, 1.6622 

Posted at 06.37 am EST