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Continuous nodes around higher prices suggest up-trend. We formed quite a wide range with a thinnish area below 145.75 which again might serve as support should we come back to that price level.
The late rally also suggests continuation.
As expected, market was quiet and trendless in the morning, ranging in 15 tics.
Then, from the release at 1.45 am that ECB rates remain unchanged , market rose of about 60 tics in less than one hour to end near its HoD (146.08) at 10 pm.
Result is a nice green candle with no upper shadow, a POC at an hefty 146.01 and two nodes, one at 145.93 and the other one at 145.49 with a valley in between. Volume of the day is bigger than the two previous ones : Buyers are in control.
Tomorrow afternoon is the most awaited US data related to labour. Within the day, I will not be suprised if prices are exploring part of the valley between the two nodes.
I do not see any resistance and as far as support are concerned, 145.50, one of today's node and where MA 23 ut 4H shall be tomorrow and below 145.33, 145.12 and 144.90.
I traced on the attached 4H graph three rising paralell lines and I think tomorrow the Bund future contract may very well navigate between the two upper ones, as fast stochastics seem to call for a pause in the rise.
A little bit above average volume and a little above average range. An up day. PoC (145.96) is up and in the upper part of the day's range. VA is very wide and has moved up slightly.
Market again moved in a range of less than 20 ticks till 13:00 CET. Then the interest rate (non)decisions of the BoE and the ECB as well as the statements during the ECB press conference drove the market up to its HoD and new high (146.08) at 14:30 CET. After a pullback market started to rise again and hit the HoD several more times before it closed.
The PoC in the 5-day volume profile chart did not change much.
Six levels of Support
• 145.53 = PoC (VAH = 145.70, VAL = 145.19, there is a thinly traded area below 145.10 down to 144.80)
• 144.55
• 143.33
• 143.15
• 142.76
• 141.65.
Bunds have made a new high. Though the daily volume in the daily chart is higher it is just a fraction higher than the 5-day average.
The daily volume profile shows a two-node distribution: one peak around 145.54 the other around the PoC (145.96). The intraday chart shows a double top at today's high: 146.08.
ESTX and DAX started the day by recovering some of yesterday's losses but after 14:30 CET they resumed their down trend. They ended the day in red while the US markets are slightly up.
Most important report tomorrow is the NFP report scheduled for 14:30 CET (=08:30 EST). Wednesday's ADP report and today's Jobless Claims suggest that the number will be negative and so should further push up treasuries.
The EconoDay report of today's Jobless Claims figures contains this warning: "...This is not good news for the April outlook but, remember, has no bearing on tomorrow's monthly jobs report for March which was sampled in the March 16 week…". So the NFP report could disappoint the bonds markets.
I found the volume and range today a bit disappointing. Was this genuine buying or more short covering?
I hope for a more volatile trading in the morning than during the last two days, but I'm afraid we will see a repetition of these two mornings.
The levels down to be monitored are 145.96 - today's PoC - and then 145.79. The latter one is the area where the correction of the first up move stopped.
In the composite volume profile since 2013-03-08 till today there is a thin area below 145.10 down till 144.80.
Friday had above average volume and above average range. An up day. PoC (146.43) is up and in the upper part of the day's range. VA is again very wide and has moved up.
Market moved in a range after the open and dropped to its LoD of 145.82 at around 10:00 CET. From here it rose to its HoD (146.54) at around 14:32 CET. The negative NFP report caused an up move of less than 30 ticks. Market than pulled back till the close.
All-in-all the market moved up by about 75 ticks since Thursday's negative Jobless claims report. But probably Wednesday's ADP report has to be viewed as the launching point of the latest up move and since then bunds have gained 127 ticks.
The weekly chart shows another up week though with a bit less range than last week. Though the volume again looks a bit low it is about average since last week was a four-day-week for Eurex.
The market has made new highs, so the weekly volume profiles show levels of support only.
Six levels of Support
• 145.53
• 145.18 (PoC,VAH = 145.96, VAL = 145.119
• 144.23
• 143.33
• 143.15
• 141.08.
The daily volume profile shows a three-node distribution: one peak around 146.43 - the PoC - one around 146.16 and the third one around 145.94.
US- and European stock markets moved down last week. For next week there are not many reports scheduled.
There are three Notes/Bonds auctions scheduled for next week: 3-Yr, 10-Yr Notes and 30-Yr Bonds on Tuesday - Thursday.
In the absence of economical reports the effects of sequestration in the USA and the debt Crisis in Europe will probably be influential.
Friday's up move at 14:30 CET does not look like strong buying, more like short covering. After such news I'd expected the market to make a second top, but that did not happen. Instead the market drifted down into the close. But after three days of buying potential new buyers may indeed have no appetite to get in at these levels.
If there are no strong moves overnight in the Asian markets and Globex then we will probably see a dull morning. Maybe a short sprint up due to late buyers and then a drift down till stock market opens or a drift down right from the open.
The level 146.23 - 146.15 will be of interest. That's where Friday's buyers (short coverers?) stepped in. A drop down to 146.00 - 145.95 should see buying.
On the up side the level 146.46 - 146.51 is of interest. That's where profit-taking seemed to start. A move above these levels should start short covering again.
To begin with, BOBL week candle is a very nice doji which could very well be a summit doji.
It is to be noted that when BUND rose friday, BOBL dropped.
Therefore, for those who are keen to play german bonds market consolidation, BOBL futures seems to me a better vehicle than BUND futures.
If market opens or goes monday below friday closing (126,78) I will take a short position with a stop a couple of tics higher than the upper shade of the doji, let's say 127,05, for a target to be defined later.
On this ut4H view of BOBL, I see a rising wedge and a double top in the 126.96 - 127.01 area. Weekly PP for the week to come is 126.75 to be compared with friday closing at 126.78.
On top of such bearish structure and the weekly doji, Friday candle makes an harami with Thursday one with more volume on the Friday candle
Moreover, on the 4H graph, I see a divergence between prices and fast stochastics.
Would prices go below weekly PP, break the support of the rising wedge and go below MA 23 ut 4H (126.72), final target will be at 126.20, which is also near from MA 23 ut 1 day and the top of the upward gap openend march 18th.
An intermediary target lies at S1 (126.50), which is not far from last week low (126.47) . Stop to be placed a couple of tics above last week high.
A short position would be of the swing kind and therefore could be taken for several days. Would the market go in our favour, a trailing stop would be put in place to protect profits.
Friday's value reaches right to the HOD and close is thus within value which might suggest a needed break within an uptrend. The uptrend is still intact, value areas are travelling continuously higher, no overlapping. The colors of my lines are irrelevant, all may serve as supports, resistance only in case the price travels back to previous value area.
So we are balancing, right now it is just a pause in an uptrend. Tomorrow we may either balance more or go back to previous value which is less probable but who knows.
Below average volume and range. A down day. PoC (146.17) dropped, the VA is completely contained within Friday's VA.
Market moved in a trading range on average volume till around 11:00 CET, when it started to drop. Made a first low at about 14:20 CET and then retraced about 30 ticks. Quite a lot in view of the day's range. From here it drifted down till the close when the LoD was made.
In the 5-day volume profiles chart the PoC did not change.
Six levels of Support
• 145.18 (PoC,VAH = 146.05, VAL = 145.11)
• 144.71
• 144.23
• 143.33
• 143.15
• 141.08.
The up trend in the daily chart looks still healthy.
Stock markets are up, especially US markets which made a solid up move, almost 1%.
There is only one report scheduled for tomorrow, Wholesale Trade at 16:00 CET (=10:00 EST).
The drop today did not look like being caused by selling but caused by the absence of buying. The up moves early in the morning and in the afternoon look like algos pushing up the market just to have it drop then. The down swing in the last hour looks more like selling.
If the recovery in the stock markets continues we will see another down day in the bund tomorrow. Ideally we see a small up swing in the first hour - maybe up to 145.96 or 146.06. If the stock markets resume their recovery then a drop to below 145.80 should follow. If it drops further 145.48 should offer support.
A couple of things to add to the two previous reports.
Day candle stick forms a bearish engulfing with the previous one, however with a smaller volume and market closes below weekly Pivot Point (146.00). Upward move is stopped and tomorrow candle may give more information on whether the upward move is over or only pausing.
I see on the ut 4H graph the Bund future contract in a rising wedge, near the support line. In the case such support is broken, target is 145.15, with 145.30, MA 44 and the grey oblique as a intermediary target. S1 at 145.48 is also a possible target.
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Level of fast stochastics advocate for a rebound on the supporting oblique but keep in mind that oftenly, there is a generous pullback when the support oblique of a rising wedge is broken.
If market opens tomorrow with a downard gap, I will try to enter long to play the pullback, otherwise I will wait for the support to be broken to enter short.
MA 44 (145.30) is a support level and below 144.80. Friday top (146.54) is an obvious resistance level.
I will likely wait for cash stock markets to open before refining a strategy as it is still to be seen how stock markets will react to Alcoa 1Q data.
