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Price Signal Summary - FI Gains Considered Corrective

OUTLOOK
  • In the FI space, Bund futures remain in a clear downtrend and the extension lower this week, confirmed a resumption of the bear leg that started early August. The focus is on 135.27, the Mar 2012 low (cont). Gains are considered corrective.
  • Gilts have traded in an extremely volatile manner this week, however, trend signals remain bearish. A resumption of weakness would refocus attention on 90.99, Wednesday low and the bear trigger. Note that Wednesday’s price pattern is a bullish engulfing candle. However, additional reinforcing price evidence is required to validate this signal and confirm a short-term shift in market sentiment. This would signal scope for a stronger short-term correction.

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