| Index | Strat | Risk | Target |
| T-Note | Flat | ||
| Gilt | Flat | ||
| Bund | Flat |
Treasury Note (10-Year)
Short-term Technical Outlook
The break below 122-03 last month may have been pivotal for the ten-year Treasury note; but the price action we have seen since then wouldn’t suggest so. Monday’s decline pushed the contract below the abovementioned level once again; but there is still a range of support that has to be surpassed before the bear wave is back underway. An immediate hold up to declines is the 200-day SMA that matches the intraday pivot for the past three weeks around 120-16. This could turn into a significant trend deflector should momentum vanish. Otherwise, the next target is the swing low from the 8th at 119-22.
Long-term Technical Outlook
The 10 year is holding above the 400 week SMA (save for a few days last week) and the series of lower lows and lower highs since early 2006 is intact so there is no reason to alter the bullish outlook. Favor the upside and anticipate a record high.
UK Gilt (10-Year)
Short-term Technical Outlook
The bearish reversal the gilt was able to win in March has struggled to develop its footing. This past week, the break below 120 was retraced just as quickly as it was won. Temporary resistance is seen around 121.35; and with the presence of the nearby floor, there is bound to be a breakout (regardless of direction) soon. There is a loose trend of lower lows still in place starting with last month’s swing high; so the technical bias is still bearish until 123.50 comes back into view.
Long-term Technical Outlook
Gilt wave structure is clear. There are 3 waves complete at the 2008 high. An unorthodox top was made in 2009 in what is probably wave b of a triangle. If indeed a triangle is unfolding, then wave c completed last week and waves d and e should unfold over the next month + before a thrust higher completes the entire rally from the 2007 low.
German Bund (10-Year)
Short-term Technical Outlook
Just a few months ago, the bund was cutting a clear channel between 124.65 and 123. Since then, however, we have seen sharp burst of volatility that follow little technical pattern to an end. However, with the bullish reversal from 120.10, we can start to see the rhyme to this technical noise. This reversal occurred on around a major 38.2% Fib retracement pulled from the June to January rally. Another use for this reversal is to further confirm the presence of a descending trend channel that began in February/March. We will see pressure build between this hard support and traversing trend; but as of yet there is still plenty of room to maneuver.
Long-term Technical Outlook
The Bund is similar to the gilt in that I anticipate a new high in a 5th wave within the 5 wave advance from the 2008 low. Wave 4 may be complete at last week’s low.
Japanese Government Bond (10-Year)
Short-term Technical Outlook
The benchmark JGB is back to cutting trends; but not of the sort that is attached to high volatility and fresh highs or lows. Instead, we seem to have returned to the same pace of congestion that the market was stuck to between November and March – though this time around the trading band is far more constrictive. Over the past three weeks, a series of lows has built up around 136.50 while a loose ceiling around 137.35/50 has capped attempts at retracing the March plunge. This is a tight range and will not likely last as long as the previous one.
Long-term Technical Outlook
Commentary has not changed in months…”a 10 year head and shoulders top may be in the works and 142 should remain intact (if the pattern is to play out) as the right shoulder of the formation. A break below the neckline would likely see a breakdown that carries into long term support levels of 122.50 and 116.41/117.20.” This is one of the best trade opportunities of the next year +.
Written by: John Kicklighter and Jamie Saettele, Strategists for CFDTrading.com
Questions? Comments? You can send them to jkicklighter@cfdtrading.com
