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Very strange day, the stock market rallied and the Bund did not want to go lower.
While the resistance in the 143.00 level has been tested again (high is 142.98) the low was the same than yesterday (142.61) with reactive Buyers strongly getting into the market when such level was reached.
The session actually begun with a buying tail of about 8 ticks, rose a shade lower than 143, then reactive Sellers pushed the market down to the open level and then to yesterday's low before reactive Buyers sent the market very near to the open level at 5.30 pm.
Result at 5.30 pm is a doji. POC at 142.81 is very close to yesterday's level (142.76).
On the day graph, we still can see the two channels while on the 4H graph, prices are also still in the upward squared triangle, knocking repeteadly the horizontal resistance in the 143 -143.10 area.
Volume profile on 5 days is a p shape with most of the volume between 142.70 and 172.90.
The exit from such range has to be violent and I would be rich if a knew the exit side....
In favour of an upward exit, the repeated test of the horizontal resistance and the good behaviour of the Bund market with stocks going up. In favour of the downard exit the hidden bearish discrepency of MACD on a daily basis and the entrance in the square triangle visible en ut 4H by above.
Resistance is clearly on the 142.90 - 143.10 area while support levels are less clear to me : 142.65 then the oblique of the triangle.
Regarding targets, below such oblique, we may go for a 180 ticks ride while above the horizontal resistance target is 144.80.
Tomorrow will see not only German PPI at 8 am, US statistics at 2.30 pm and the FOMC minutes disclosed at 8 pm but also a 10 years maturity bund auction were bids must be submitted on or before 11.30 am.
Many reasons to exit the 142.70 -142.90 area for good......
Good post MARS, there will be a big break, whatever direction it takes AND it will include contribution from the stock market. I'm kind of thinking in a "Hugh Hendry way of a breakout" - maybe first a false breakout and then a reversal to the true (=several months long) trend evolves... who knows.
But the stock bull seems so strong now that what could stop it? S&P is close to ATH and it takes a miracle to NOT make it (ATH) this spring. So, this process could lead to a false breakout. Why? In my thinking the S&P is the lead for all other stock markets, so FESX and DAX could easily levitate for some time still, leading into a drop in FGBL.
BUT, S&P is now approaching a technical nose bleeding level, because it's now about 9% over its 200dSMA - historically 10%+ over 200dSMA is a prelude to a correction. So, still a few percentage points up in stocks here and then a pause. Bunds might make a false breakdown first but then it could reverse.
Just my technical thoughts, markets will rationalize all this later in fundamental terms, too
Low volume, very uninteresting day, maybe all are waiting for tomorrow.
We are still within the balance, with strong responsive buyers at 142.61 for now, however we have travelled down from today's value area which might signal a down move to the other side of the balance VA.
Supports and resistances almost unchaged since yesterday.
Below average volume and well below average range. Even a smaller range than yesterday. A down day. The PoCs of the last three days are almost identical, The VAs of Monday and today are within the range of Friday's VA.
Market moved within a tight range till the release of the ZEW report, dropped to its LoD and then surprisingly rose back to its HoD. For the rest of the day market zig-zagged around.
Three levels of Resistance
• 142.80 (PoC)
• 142.86
• 142.90.
Three levels of Support
• 142.50
• 141.88.
The 60-minute chart shows that we have higher lows for 4 days now, but not higher highs. So this is not an up trend.
ESTX and DAX made solid up moves today, even starting before the release of the surprisingly positive ZEW report. But bunds did not drop in a corresponding manner. What is holding back the market? Maybe tomorrow's auction of 10-Yr bunds? Scheduled for 11:30 CET (=05:30 EST).
The down move in the last hours of today looks weak. Maybe this is a sign of what is going to happen tomorrow. I would like to see an up move (preferably a double-top) and then a drop again.
Alternatively an immediate drop to 142.50/.35 and then a retracement.
I'm not so sure that the up swing in the stock market will end soon. Markets can stay irrational longer than your account solvent.
I will not be watching the market tomorrow but anyway will attempt to make the pre-market analysis.
We went down to the current shortish-term value area low and now are heading back to value area high. We are above the LVN at 142.60 and we will see tomorrow if it holds. We may actually just fill the valley in.
Average volume, but below average range. A down day. Today's PoC (142.37) is the lowest of the last 4 days. The VA lies in the lower half of the daily range.
Market started to drop right after the open till 11:30, but with a nasty correction at 10:30. Then it rose a bit to correct the down move and made a second low, its LoD at 15:00. From here it rose till the close and almost reversed its down move.
Stock markets did not like the reports released at 14:30 CET (=08:30 EST) and the FOMC report released at 20:00 CET (= 14:00 EST). ES dropped right from the RTH open till the close.
The 5-day volume profiles show 142.50 as PoC twice as well as 142.87 twice as resistance.
Two levels of Resistance
• 142.87 2x.
Three levels of Support
• 142.50 2x (PoC)
• 141.90.
In spite of the solid down move today, bund did not drop below 142.00 but reversed its course well ahead of that level. The action in the last hours of trading - after 20:00 CET - shows a solid up move, high volume for this time of day.
So it is safe to assume that the up move will continue tomorrow. Till now the level of 143.11 has not been broken and it will be interesting to see whether this can happen tomorrow. But first 142.87 have to be broken.
If the market follows this path, I guess a correction will take place between 142.80 - 142.90.
The auction result is not very good. Rates are about 0.10 higher than last time (1.66% vs 1.56%) and bid to cover ratio drop at 1.2 from 1.5. There is clearly less appetite for 10 year bunds.
On the daily graph, we can see that the Bund has not yet chosen between the upward channel and the downard channel but that the exit shall be very soon, my guess is before the end of this week.
Candle of the day is a hammer but not in a very good place. 143.35/40 is the first target if the resistance oblique is broken,(around 142.80 tomorrow, as it is an downard oblique, the resistance area goes down every day). On the way of such first target, there is obviously the 142.90 - 143.10 resistance area. On the support side, the upward oblique is now around 142.10
On the 4h graph, it is obvious that prices are still in the rising squared triangle but neither the supporting oblique nor the horizontal resistance have been tested today and at 10 pm, prices are just at mid distance.
I will therefore scalp the market waiting for prices to get closer from one of the two lines. Upon such event I will closely monitor market behaviour with a particular focus on volumes and will probably wait for a pullback or throwback before eventually taking a swing approach.
Plenty of statistics tomorrow on both side of the Atlantic to make ID traders happy including a spanish bonds auction that may have an influence on the bund market.
FGBL resistance was broken AND simultaneously FESX tested its double bottom, now a triple... scary looking chart at FESX.
Fast stochastics (hourly RSI) look now a bit stretched on both, so maybe a consolidation effort, but I do think that this is now a real break - stocks down, bund up.
Well above average volume and range. Though volume is > 1 mio contracts traded the range is just 89 ticks. An up day. PoC (= 143.20) and VA are the highest of the last 20 days.
Market opened with a small gap up and after a fast initial move up traded for more than an hour around the level of 142.87. Then it moved up 44 ticks in 4 minutes. When price broke above 143.08 a lot of stops have been triggered, see first screen shot. Market dropped back and moved in a sideways range for more than three hours till it resumed its up trend. Though during this time it remained above that 143.08 level. HoD was made late in the day, at 19:00.
I have run out of resistance levels in the 5-day volume profile chart, see levels of support only.
No level of Resistance
(144.14)
• Five levels of Support
• 142.93
• 142.87
• 142.80 (PoC)
• 142.54
• 141.88.
The daily chart shows a clean up trend now, since 2013-01-30.
The daily volume profile shows three (four) peaks: A small one around 142.87, one around the PoC of 143.20, and one around the VAH of 143.45. There is another one around 143.37. But I think that 143.45 and 143.37 are pretty close to each other.
Stock markets continued to drop but ESTX and DAX stopped their down trend around 11:30 CET (=05:30 EST) and traded sideways. ES turned around at 20:00 CET (=14:00 EST).
Stock markets look like they have found a bottom.
Tomorrow I see no reports scheduled for the US Markets. For the European Bond Markets the LTRO repayment announcement scheduled for 12:00 CET (=06:00 EST) might be influential. It is the first LTRO-2 announcement and a fellow Twitterer pointed out that this one is to be monitored.
Though today is a wide range up day, the range is a bit disappointing, I had expected to see 100+ ticks. The PoC lies almost in the middle of the range. It took also unusually long for the market to resume its up trend after that initial up move of about 60 ticks in the first two hours: It took 9 hours to add another thirty ticks to the range.
I have added another chart showing two composite volume profiles: one for the down move since 2012-12-10 and one for the up move since 2013-01-30. Looks like 143.60 is another wall to climb.
Looking at the recovery (or better stop in down trend) in the stock markets in the last few hours, the difficulty the bund had to move up and its drop in the last three hours I think it is likely that this drop will continue tomorrow morning. Maybe back to 143.20/.11.
Another drop in the stock market will nullify this scenario. That LTRO-2 detail report is the big unknown: it may be a non-event or rattle the market.
