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Price Signal Summary - Bear Threat In Gilts Remains Present

OUTLOOK
  • In the FI space, Bund futures traded sharply lower last week before finding some support on Friday. Gains are considered corrective and the trend outlook is bearish. The recent breach of support at 129.72, Aug 14 low and a key bear trigger, reinforced a bearish theme and confirmed a resumption of the primary downtrend. Sights are on 126.54 next, 1.764 projection of the Jul 19 - Aug 4 - Aug 8 price swing. Key short-term resistance is at 130.19, the Sep 22 high. Initial firm resistance is at 129.69, the 20-day EMA.
  • Gilt futures remain bearish and last Thursday’s sharp sell-off reinforces this condition. The contract has breached 93.36, the Sep 6 low and a key support. This has opened 92.71, 76.4% retracement of the Aug 17 - Sep 20 bull run. Clearance of this level would expose key support at 91.47, the Aug 17 low. Key short-term resistance has been defined at 96.71, the Sep 20 high. Initial firm resistance is at 94.74, the Sep 28 high. Gains are considered corrective.

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