DAILY REVIEW 29 October 2014

EU Analysis:

EU: Daily- The candle is a below-average spread (80pips) bull closing 1/3 off the high on low vol<1day. The candle close and volume suggests more upside. Levels of interest: Demand: short-term 1.2715, 1.2705, 1.2690, 1.2605, 1.2500 Daily/Weekly: 1.2034 Supply: short-term: 1.2764,1.2785, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000. Background: The Euro remains fundamentally weak.  Even with headlines like " EUR bank stress tests results not as bad as feared, EUR higher!", the fact is that 24 banks failed the stress test and papering over the cracks is at best a temporary stop gap measure. Another fact is that the US economy is recovering, not as quick as the FED would like but still, it is recovering. Fundamentally this means a stronger USD vs EUR. The release of the FOMC minutes later today will likely be nothing more than the fuel for prices to get up to supply levels and then resume the downtrend. Therefore the bias remains DOWN for the longer term trend. Current SM trend is UP but we will likely have the downtrend continuation after FOMC as SM takes profit and reverses with fresh sell orders from higher levels. The retail order positions on Oanda (see chart above) show some peaks at 1.2760, 1.2850, 1.3000. With the bulk of traders trapped short and stops plus fresh orders above, the SM will want to get rid of these poor souls before resuming the downtrend. Price did exactly as analyzed yesterday, pushing higher yesterday to 1.2764 before retracing downward. SM is likely to create selling pressure to remove weak longs once more to around the 1.2715 - 1.2690 level before reversing back to retest yesterday's high or higher and then reversing to continue the downtrend.

EU long levels: 1.2715, 1.2705, 1.2690, 1.2605, 1.2500

EU short levels: 1.2764, 1.2785, 1.2826, 1.2840, 1.2900, 1.2950, 1.2975, 1.3000

GU Analysis:

GU: Day- The candle is a normal spread (94pips) bull small body spinning top closing on low vol>1day. The candle close and volume suggests the possible commencement of absorption of buying. There is also volume divergence over the past week suggesting that buying pressure is waning. Demand: Weekly/Daily:  1.5850 Supply: Short term: 1.6080, 1.6105, 1.6121, 1.6150, 1.6183, 1.6225, 1.6400, 1.6492, 1.6523 As analyzed, SM pushed prices higher yesterday to 1.6181, just 2 pips shy of our anticipated level before retreating downward. SM has faded weak longs to Asia low 1.6127 level. The Oanda retail stacks are seen at 1.6175, 1.6200, 1.6275, 1.6300 After removing weak longs by about 50 pips,SM is likely to test Asia low or lower to around 1.6120 - 1.6110 before reversing to continue the upward move to test yesterday's high 1.6181 or higher before reversing to continue the downtrend. Note that GU may find demand again back at the current swing low 1.5874 to the 1.5853 pivot.

GU long levels: 1.6120, 1.6105, 1.6081, 1.6063, 1.5853 
GU short levels: 1.6121, 1.6150, 1.6183, 1.6225, 1.6286, 1.6400, 1.6492, 1.6523 

Posted at 2.09 am EST