The Long Gilt continues to be under pressure despite an effort to end last week on a positive note. The Dow theory remains in play whilst we remain below 107.83 and just above this we have the resistance line from our Bear Channel that now has three clean contacts. We now have our major support at 105.89 within our sights so it is time the Bulls started to make a show or risk some more painful action. We would some sort of bounce mainly due to the fact that there are no close resistance levels to prevent this happening.
Indicators in Play
Charles Dow defined a bear market as a series of declining peaks and troughs. The opposite applies for a bull trend.
Trend Channels appear when there is symmetry between a support or resistance line and its counterpart. These are useful in a market where there is a clear direction but the move is developing over time with counter swings occurring.
Summary
We are still with the Bears here but the fact that we are near a major support at 105.89 which also coincides with the support from our Bear Channel makes us wary if not expecting some sort of bounce. We would be looking to sell strength though but not at these levels.
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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