Halister News

(Bloomberg) -- Generic bund futures contract is showing an aggressive rejection of its 200-DMA resistance at 162.65, which may suggest it is at the end of the counter-trend move higher seen since early July, Bloomberg technical analyst Sejul Gokal writes.

• See chart here; RXU7 -87 ticks to 161.66
• Momentum has unwound its oversold condition reached days after ECB President Draghi’s Sintra speech and provides green light for near-term impulsive move on contract
  • Nine-day RSI at 45 vs. 16 reached earlier this month before valuation-driven bounce unfolded
• Support at 161.21 and 161.87 ahead of 160.31 month low
  • NOTE: Bund futures oversold objective at 162.60-78, cited in July piece, has been achieved
• Bund 2/10 curve is re-establishing its steepening trend and validating Monday’s bullish hammer candle against the 108bps Fibonacci support; spread now poised to top the 121bps Fibonacci hurdle, which sparked a tactical flattening back on July 12 (see live chart here)
• Elsewhere, UST 10Y yield is showing embryonic signs of recovery against the critical 2.23% support (see analysis)
  • Eurodollar front generic contract (EDZ7) is also rekindling its bearish trend after strong early-month rebound stumbles against the daily and weekly cloud boundaries (see analysis)

• NOTE: Sejul Gokal is a FICC technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice