Halister News

(Bloomberg) -- Schatz futures directional bias is firmly skewed lower following last week’s bearish price confirmation and marked momentum deterioration; market now exposed to the all-important 200-DMA, which since early 2014 has served as a significant pivot and value level for bulls, Bloomberg technical analyst Sejul Gokal writes.

• See chart here; DUU7 (Sept.) at 112.07
• Weakness last week below the 100-DMA confirmed a near-term top at the ’gap zone’ produced after 1st round of French elections (112.220)
• Last week’s MACD rollover against multi-mo. channel top compounds the downside risks and steers focus toward range lows and 200-DMA at 111.956-111.930
• Breakdown below here may instigate a major behavioral shift that can see fresh sellers pile in to target YTD lows at 111.805 ahead of 111.72 (76.4% Fibonacci on Nov. 14 rally)
  • Bund 2s10s curve flattening could accelerate toward 85bps and then 81bps (click here for June 6 flattening view)
  • Implications may also extend to USD-EUR 2/10 box which may extend move to the objective/support set at -33bps
• Risk factors:
  • A close above the 112.22 (’French’ gap top) negates the downside outlook in Schatz futures

• 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.