Well here we are again in the 10-year notes, eyeing the rollover gap support at 116.055. Each time equities try to establish a recovery; the bond markets catch a bit of a cold. This time around though we have some greater concerns. Since our peak in the middle of March we have been making lower highs as demonstrated by the pink lines on our daily chart. We also have been posting lower lows on each dip thus confirming Charles Dow’s definition of a bear trend. Finally on the smaller weekly chart you can see we have closed below trend support.
Indicators in Play
When a market opens above the previous days range we say this has created a gap or window. If a market is truly healthy then this gap should hold as support, which is exactly what we saw back on the 5th of March.
Charles Dow defined a bear market as a series of declining peaks and troughs. The opposite applies for a bull trend.
Summary
Comment from the 10th April:
“Short term we are looking to sell strength with the expectation of taking a look at gap support 116.055. We would be looking to buy down at this support area but would be reversing to the short side again if this failed to hold” We will be sticking with this play!
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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