The Bund is still in this orderly decline making lower peaks and troughs on each swing, conforming to Charles Dow's definition of a Bear Trend. Back on the 1st of November last year we posted a low of 112.58 and at the end of December we bounced hard from a low of 112.60, so this is a good support area. Early trade today has seen us touch 112.53 but the Bulls have since stepped up to the plate. A close above 112.98 would be encouraging for this market but the resulting Bullish Engulfing pattern would only give us another opportunity to sell at better levels.
Indicators in Play
A Bullish Engulfing pattern occurs at the bottom of trends and consists of two candles. The first is a red candle that opens high and closes lower. The second candle opens below the previous days close and closes above the previous day open.
Charles Dow defined a bear market as a series of declining peaks and troughs. The opposite applies for a bull trend.
Summary
We are not keen to sell down at these levels but also do not necessarily feel comfortable going long. So its a case of selling into strength with 113.78 or just below the ideal area to make 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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