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Bear Cycle Extension Once Again In Bunds

  • In the equity space, S&P E-Minis are trading higher, extending the bull cycle that started Mar 15. Resistance at 4578.50, Feb 9 high, has been breached. This opens 4663.50, the Jan 18 high. Initial support is at 4407.82, the 20-day EMA. EUROSTOXX 50 futures have continued to trade inside its current range, although futures are attempting to break higher. Recent consolidation still appears to be a bull flag - a continuation pattern that reinforces current bullish conditions. Attention remains on the 50-day EMA at 3861.40. This average represents an important resistance. If cleared, it would further strengthen a bullish short-term theme and open 3965.50, the Feb 23 high.
  • In FX, EURUSD breached support at 1.0961 Monday, the Mar 22 low. The break lower reinforces short-term bearish conditions following the recent pullback from 1.1137, Mar 17 high. An extension lower would open 1.0890, the Mar 9 low and 1.0806, the Mar 7 low and bear trigger. Key short-term resistance is unchanged at 1.1137, Mar 17 high. GBPUSD traded sharply lower Monday, extending the pullback from 1.3298, Mar 23 high. Prices have breached 1.3120, the Mar 22 low and this opens 1.3000, Mar 15 low and the key support. USDJPY rallied sharply higher Monday, cresting at a new cycle high and the best levels since 2015 at 125.09. This also resulted in an extension of the extremely overbought condition (the 14-day RSI hit its highest since 2001 on Monday). Current momentum however suggests the USD still has the potential to extend this bull cycle, which would open 125.28 next, Aug 12 2015 high. Initial support is at 121.97, yesterday’s low.
  • On the commodity front, Gold is trading lower. Key support is seen at the 50-day EMA that intersects at $1902.7 - just ahead of the recent low of $1895.3 on Mar 15. A break of these levels would strengthen a bearish case. In the Oil space, WTI remains in an uptrend however yesterday’s move lower does highlight potential for a deeper retracement. The contract has traded below the 20-day EMA, at $104.82. A clear break would strengthen a bearish case and signal scope for a move towards the 50-day EMA at $96.44.
  • In the FI space, Bund futures remain bearish and are trading lower once again today. The focus is on 156.88, the Mar 8 2018 low (cont). The {GB} Gilts trend condition remains bearish. Futures traded to a fresh cycle low Monday but did rebound from the session low of 119.86. Gains are considered corrective. The break of 120.26, Mar 24 low, marks a resumption of the broader downtrend and the 120.00 handle has been breached. Further weakness would open 119.75, 123.6% retracement of the Feb 15 - Mar 1 climb.

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