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From a technical perspective German Bunds remain firm. The market took out the year’s highs on the contract this morning. The previous high for the year was 146.54. Further gains through here should target the 146.89 futures all time highs set last year and then the 1.127% all time low yield level. A move through these levels would be very revealing of the state of the global economies. A failure to back below the 146.54 may be the first sign that this rally has at least temporarily run its course, however we would need to see the 145.72-85 area give in order to signal/confirm this.
Can you help answer these questions from other members on NexusFi?
Over the last 2 weeks, a number of ECB speakers have made important comments with regards to the timing of the next rate move by the ECB. The talk has been that they need to see further signs of macro-economic deterioration in order to justify cutting rates. After a weak German IFO number a week ago, today saw weaker PMIs from Germany. This has pushed German bond yields sharply lower and the Euro also sharply lower this morning. The weak data makes a rate cut at the next meeting more likely and we should now see a build up of expectations going forward into the meeting. German 10yr Bund yields have now dropped to the 1.2% mark and is closing in on the all time futures highs at 146.89 and the all time low yield at 1.127%. A further deterioration of economic data could now see the Bunds make all time low yields heading into the month end. Also any speeches by ECB members could now be carefully followed by the markets again.
Well above average volume and well above average range. A down day. PoC (146.08) is down, VA is very wide and embraces yesterday's. @MARS Today still fits my definition of an up move: higher high and higher low.
Market opened with a gap up and made two volatile moves at 08:30 CET and 09:00 CET. At 09:00 CET the dip to 146.15 and the move back up to .21 was unbelievably fast. Market moved up to its HoD (146.77) at 10:40 CET again showing candles with long wicks. From here it started to crawl down slowly till around 15:00 when market dropped below 146.43 and started to drop down violently on high volume. LoD (145.91) was made around 17:50 CET. From here market started to make a pullback up. A fake news about explosions in the White House caused a violent spike up in ZN and a corresponding drop in the Stock markets. As the news turned out to be a fake markets recovered their pre-spike levels.
Stock markets made strong up moves - above 2% in ESTX and DAX and above 1% in the US markets.
Today's volume profile looks like a two-node distribution: one node around the PoC and another one in the upper end of the range at 146.62. The TPO-profile is a bit more b-shaped with its node at 146.03.
Surprisingly the PoC in the 5-day volume profiles did not change.
Six levels of Support
• 146.05 (PoC, VAH=146.37, VAL=145.90)
• 145.95
• 145.74
• 145.47
• 144.22
• 143.07.
There are only two reports scheduled for tomorrow: ifo at 10:00 CET (=04:00 EST) and Durable Goods Orders at 14:30 CET (=08:30 EST).
The up move today and the following drop did baffle a lot of people. Looks like Bulls and Bears are battling it out in bunds. The strength of the stock markets is astounding because the economic news have not been that great.
The spike at 19:00 CET caused by the fake news looks like it triggered the stop losses of some newly opened short positions. The questions is will these traders try to re-establish their short positions? This should put some down pressure on the market.
Next levels down are 145.86 and then 145.74, 145.67, 145.60.
In view of the strong up move today in the stock markets these may take a break tomorrow and pullback a bit. This will lift bunds. I view 146.15 - .21 as interesting level: a move above that should push up the market further to 146.29. But the chart pattern looks like we will see a dip down below today's low first.
A down day with close within the VA but near low, selling tail. We are still trading value, also building the value in the upper part of the LT range. The ultimate direction is down, however I will watch the 145.85 level for rejection of sellers.
After the German PMI was released, Bund future contract tried to break the horizontal resistance in the 146.54 area but reactive Sellers entered into the market above 146.60 and pushed the market down. Such failure was obvious when prices went below the opening level. Market continued to drop and Bund found some support in the 145.90 area where reactive Buyers entered into the market.
Result of the day is a black cloud candle, almost a bearish engulfing with good volume. Bund is however still in the upward channel as can be seen in the UT 1 day graph.
On the 4H graph, I see a small upward channel (4 points of contact on each oblique) and Bund is nearby the supporting one.
Bund is actually within a triangle limited by the horizontal resistance at 146.54 and the supporting oblique, with MA 44 at 145.85 and MA 20 UT 1 day at 145.70.
Therefore, I see 146.54 as a major resistance and it is to be seen wherther the 145.70-80 support area will hold or not.
Exiting the UT 1 day upward channel by below would mean that 146.77 was the high of the week and will not probably be seen again before long.
In the case the 145.70 level does not hold, next serious support is at 145.93 with a possible minor support at 145.40.
Alternatively, going above tuesday HoD would likely trigger some panic buying.
For tomorrow, on top of the IFO on the morning and some US statistics in the afternoon, there is a 30 years Bund auction which result shall be known between 11 and 11.30 am.
I added a third graph with the french OAT on a daily basis with a very neat tombstone doji and a fourth graph with the 30 years US T bond, also on a daily basis with a shooting star.
Does not appeal to buy bonds....therefore I will have a biais down in my trading tomorrow.
Take care and be cautious, Much volatility is likely ahead.
The Bund was lower on the day. The market traded to a new high for the year above the 146.54 level before turning around to sell-off sharply. If the 145.72 level is now taken out we could see a confirmation of a short-term top. This should allow for a stronger round of selling to hit the market. Otherwise, the market would need to see a quick recovery back through the 146.54 level in order to settle the volatility and for the market to build steadily higher.
Average volume and average range. An up day. PoC (146.19) is up, VA again is wide and overlaps yesterday's.
Market opened with a down gap and rose to a first high at 10:00 CET (=release of ifo report). From here it dropped to its LoD (145.62) at 12:00 CET. Here the market turned around and rose straight up to its HoD (146.29) at 16:10 CET. A tight sideways range till the close followed.
In spite of the negative economic reports stock markets continue to move up - above 1% in ESTX and DAX.
Today's volume profile has two distinct peaks: one node around the PoC in the upper end of the range and another one around the VAL (145.86). The TPO-profile is a bit more p-shaped with its node at 146.17.
Again the PoC in the 5-day volume profiles did not change.
Six levels of Support
• 146.05 (PoC, VAH=146.30, VAL=145.87)
• 145.74
• 145.55
• 145.47
• 144.22
• 143.07.
There are two reports scheduled for tomorrow: Jobless Claims at 14:30 CET (=08:30 EST) and Kansas City Fed Manufacturing Index at 17:00 CET (=11:00 EST).
The level between 146.15 - 146.21 proved to be of importance twice today: first during the up move till 10:00 CET. Though the market went up to 146.25 here, the main selling took place around 146.17. Second time after the HoD was in. Now this area offered support, the market did not drop below it.
The VAL in the Composite VP starting at 2013-04-12 - when the latest up move started - is 145.69. The VP below this level is pretty thin so it may be viewed as buying tail. I think it is important that the market turned up from here.
Looking at a higher time frame chart and the OI then the latest down swing looks like long liquidation. Today there have been rumours again that the ECB will cut rates and that should lift the market. But till now it looks like some buyers who have bought in anticipation of an cut got unnerved because the rumor had not been confirmed.
The other important factor are the stock markets, they continue up. Though the US markets have not been quite as positive as the European ones.
For an up move tomorrow I would like to see an initial drop below 146.17 - maybe to 146.04. If stock markets move down a rise above today's high and further should follow.
Bund future contracts 8.30 am opening was with a gap down. Sellers tried to exit from below the upward channel visible in UT 1 day but reactive Buyers strongly entered into the market from 145.62 level to push prices above opening level. Market closed at 146.25.
Result is a green candle which goes above mid level of the previous one but with lower volume. The upward channel is in jeopardy and could transform itself in a rising wedge.
As can be seen on the UT 4H graph, MA 44 at 145.88 acted as support. It seems to me that Bund is forming a symetrical broadening structure, a figure of uncertainty.
The 146.77 (high of the week so far) is a resistance while 146.62 is a first support.
Prices ended wednesday not far from the middle of such range and could explore both sides thursday.
I have the feeling that the market does not know where to ge next. Before it does, moves could be hectic in what could appear afterwards as an horizontal drift.
BOBL in ut 1day is forming a squared rising triangle. Bollinger bands are getting closer, an indication of a strong move to come. If the exit is by above, target is 127.60 (equivalent for Bund would be about 147.80).
An exit by below would give 125.80 as target. Equivalent for Bund would mean closing the upward gap opened on March 18th.
As the market does not know where to go, it just decided not to move at all : a day for nothing.
My previous analisis is still valid.
US GDP, to be released at 2.30 pm shall give the trend, may be for the whole week.
I will likely refrain from trading on the morning and wait and see, as do say the Britts, for market reaction after 2.30 pm and then act accordingly.....
or close the book and go
