HALISTER1: Gilts Challenge 2014 Trendline as Ichimoku Sends Bearish Signal

Gilts Challenge 2014 Trendline as Ichimoku Sends Bearish Signal

(Bloomberg) -- U.K. 10-year bonds are potentially mounting a new wave lower after last week’s yield breakout above the ichimoku cloud likely concluded the recent corrective phase, Bloomberg technical analyst Sejul Gokal writes.
  • See gilt 10y yield chart here; gilt yield at 1.41% now
  • While last week’s technical breakout in yield is a bearish development for gilts, there is one last important hurdle to clear at 1.44%, representing the down-trendline from early 2014
  • A conclusive breakout above here opens the way to April high at 1.67% and then 1.95% (200-Week MA)
    • Very near term resistance from 100-WMA at 1.50%
  • Yield support moves to the last Dec. low at 1.22% with interim support at 1.25% (Jan. 17 low)
  • Bearish bias on U.K. rates continues to grow among bank strategists, with Morgan Stanley recommending new shorts in 10-year gilt futures
  • NOTE: Past view expressed Jan. 17 with downside objective at 1.14% 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.
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