Halister News

(Bloomberg) -- Gilt yields may continue heading south in coming days after breaching medium-term average line at 1.25% last week; the 2/10 curve has also seen an important technical violation arguing for more near-term flattening, Bloomberg technical analyst Sejul Gokal writes.

• See gilt yield chart here; 10y yield at 1.23% now
• Gilt yield broke below the 26-week exponential moving- average at 1.25% on closing basis, which leaves it exposed to a descent toward 1.10%-1.05% support area
  • Interim Fibonacci support at 1.14%
  • More aggressive downside chart objective found at 90bps, the double-top measured target
  • MACD histogram has seen a back-to-back negative print below zero line; latest bar showing build-up in downward momentum
  • A close above 1.33% would negate the bullish gilt stance
• On daily charts, yield has sustained below the ichimoku cloud with latest yield uptick attempt faltering within the thin cloud region around 1.34% in mid-Feb.; MACD on dailies remains firmly negative (see daily chart)

GILT 2/10 CURVE (see chart here)

• Curve has broken below the 100-DMA support, first time since October with shorter-term averages pointing downwardly favoring flattening
• Possible flattening objective seen at 99bps vs. 113bps current
  • 99bps is the 38.2% Fibonacci of Aug.-Dec. steepening phase

• NOTE: Past view expressed Jan. 23 with objective at 1.67% now negated amid latest chart developments

• 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.