HALISTER1: BTP-Bund May Form ‘Dark Cloud Cover’ Pattern at Brexit-Day Wide

BTP-Bund May Form ‘Dark Cloud Cover’ Pattern at Brexit-Day Wide

(Bloomberg) -- Italy-Germany 10-year yield spread has narrowed after initially gapping wider to 191bps, right against Brexit-day wide of 192bps; may form a candlestick pattern that augurs for further compression, Bloomberg technical analyst Sejul Gokal writes.
  • See chart; spread now -2bps at 180bps
  • May see mean-reversion narrowing to 21-DMA at 156bps
  • 9-day RSI diverging negatively, supporting near-term spread compression phase
  • In light of the upcoming Italy referendum, analysts say BTP selloff may be contained as the nation’s debt would be supported if the ECB extends its QE program at its meeting scheduled 4 days after the vote
  • NOTE: Nov. 14, BTP-Bund Spread Eyes Brexit Day Wide at 192bps (from 176bps at time of writing)
  • For Dark Cloud Cover definition, click here
  • NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.
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