DAILY REVIEW 22 October 2014

EU Analysis:

EU: Daily- The candle is a large sprea (125pips) bear closing at the low on low vol>1day. The candle close and volume suggests more downside. Levels of interest: Demand: short-term 1.2647, 1.2624, 1.2605, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2740 (Monthly ema200), 1.2785, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000. Background: The fundamentally weak Euro vs the FED's wait and see strategy resulted in a pullback from the downtrend removing lots of weak shorts. Monday started with the FEDs Rosengern saying that the conditions are right for the FED to end QE after the October meeting. Yesterday, rumours of the ECB buying corporate bonds and the ECB being one step closer to QE looks like these news have finally given SM the fuel to start resume the downward move without taking prices back to the 1.2900 - 1.3000 level. Although prices look to be back into the downtrend, we may see another spike back up if the US CPI data is poor. SM is likely to test the 1.2661 level or lower to 1.2865 before reversing to test Asia low at 1.2787 or lower to around the 1.2750 level before the push back up to 1.2900 and higher.

EU long levels: 1.2647, 1.2624, 1.2605, 1.2500

EU short levels: 1.2740, 1.2785, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000

GU Analysis:

GU: Day- The candle is a below average spread (74pips) bear closing at the low on low vol>1day. The candle close and volume suggests more downside. Demand: Weekly/Daily:  1.5850 Supply: Short term: 1.6225, 1.6400, 1.6492, 1.6523 The bearish volume divergence played out but missed testing the 1.6225 pivot, only going up to 1.6183 yesterday. The downtrend continuation looks to have resumed. SM is likely to fade weak shorts to around the Asia low of 1.6105 or higher to 1.6121before reversing to continue the downward move. A close above 1.6130 will likely see the highs retested.  

GU long levels: 1.6040, 1.6028, 1.5853 
GU short levels: 1.6105, 1.6121, 1.6183, 1.6225, 1.6286, 1.6400, 1.6492, 1.6523 

Posted at 06.58 am EST