DAILY REVIEW 20 October 2014

EU Analysis:

EU: Weekly- The candle is a above average spread (266pips) bull closing almost 1/2 off the high on ultrahigh vol>84weeks. The candle close and volume suggests more upside. Daily- The candle is a normal spread (92pips) bear closing just off the low on low vol<3days. 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 (H1ema200), 1.2700, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2900, 1.2950, 1.2975, 1.3000. Background: The fundamentally weak Euro vs the FED's wait and see strategy. Further to this, we need to factor last weekend's comments by FED's Rosengren and Williams where they expect the asset purchases to end on schedule without a commitment to any timetable for a rate hike. These remarks may give SM reason to push EU higher before resuming the downtrend. SM is likely to create selling pressure and test Asia low (1.2735) or lower before reversing upwards to test the 1.2900 key level and possibly higher to the 1.2950 level or more before resuming the downtrend. Any close below 1.2700 will negate the analysis.

EU long levels: 1.2740, 1.2720, 1.2700

EU short levels: 1.2900, 1.2950, 1.2975, 1.3000

GU Analysis:

GU: Weekly- The candle is an above average spread (251pips) bull hammer closing on ultrahigh vol>139weeks. The candle close and volume suggests selling. Day- The candle is a normal spread (96pips) bull "near doji" closing on low vol<2days. The candle close and volume suggests reduced demand and there is now volume divergence indicating reduced buying with higher prices. Demand: Weekly/Daily:  1.5850 Supply: Short term: 1.6135, 1.6150, 1.6203, 1.6225, 1.6400, 1.6492, 1.6523 Last week, I wrote "the candle close and volume suggests more upside but with daily volume divergence (on real volume) and a possible reversal back into downtrend continuation" Price opened with a small gap up which has since been closed removing weak shorts and is pushing higher in Asia to 1.6108 as of writing. SM is likely to retest Friday's high 1.6125 or higher before reversing to around the 1.6040 - 1.6028 level and reversing back up. A close below the 1.6028 will likely see more downside.  

GU long levels: 1.6040, 1.6028, 1.5853 
GU short levels: 1.6135, 1.6150, 1.6203, 1.6225, 1.6400, 1.6492, 1.6523 

Posted at 01.00 am EST