DAILY REVIEW 23 October 2014

EU Analysis:

EU: Daily- The candle is a normal spread (102pips) bear closing at the low on low vol<3days. 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: 1.2690, 1.2724, 1.2740 (Monthly ema200), 1.2751,1.2785, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000. Background: The fundamentally weak Euro plus the ECB's decision to purchase corporate bonds plus possible new QE has knocked the Euro back onto the ropes. Price has already made a lower low today and is reversing from the 1.2613 level in accordance with the daily continuing volume divergence. SM is in the likely in the process of removing weak shorts are are likely to push back to test the 1.2690 or higher to around 1.2724 before reversing. A look at retail order positions on Oanda suggests the 1.2750 level as the highest order stacks. However, be mindful that SM will resume once they have sufficient orders to resume the move down. They can either spike up on news to trap longs or oscillate slightly lower to build positions before reversing to resume the downtrend. The bias is still DOWN. 

EU long levels: 1.2605, 1.2500

EU short levels: 1.2690 - 1.2700, 1.2724, 1.2740, 1.2785, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000

GU Analysis:

GU: Day- The candle is a normal spread (119pips) bear closing 1/2 off the low on low vol<1day. The candle close and volume suggests reduced selling pressure and 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 as price actually pushed lower on poor UK news as I am writing. SM is likely to fade weak shorts from the breakout of yesterday's low to around the 1.6031 - Asia low or higher to 1.6050 before reversing to continue the downward move.  

GU long levels: 1.6040, 1.6028, 1.5853 
GU short levels: 1.6031, 1.6050, 1.6105, 1.6121, 1.6183, 1.6225, 1.6286, 1.6400, 1.6492, 1.6523 

Posted at 05.12 am EST