Major top on the bund measures to 155.37
After one of the most hawkish meetings in quite a long time from the ECB where they outlined a faster pace of taper and dropped their language regarding rate cuts, we thought that we would take another look at the Bund chart.
We are taking a look at the long-term Monthly chart of the Bund continuation contract and we can clearly identify a top on the chart (looks more like a descending triangle to my discerning eye). Chart patterns are fantastic, when you identify them properly of course!! For a valid top pattern this should appear at the end of a protracted bull market.
They offer a long-term downside target (you use the width of the top to measure lower), this offers a downside measured target to 155.37 (the top extends from 167.52 to 179.67) and this coincides quite well with the 156.22 2018 low. Please note that this is the MINIMUM downside target.
I also use the duration of patterns to give me some idea of time frame for when that downside target is likely to get hit. The top built from August 2019 to February 2022 i.e 2 ½ years, and targets are usually met in half that time – say 15 months.
Mind you I have noticed over the years that the targets from tops tend to get hit faster, so I think under 12 months.
We have two meetings next week - the Fed and the BOE and both are expected to raise interest rates by 25 bps, and with inflation where it is, further weakness looks likely.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
We are taking a look at the long-term Monthly chart of the Bund continuation contract and we can clearly identify a top on the chart (looks more like a descending triangle to my discerning eye). Chart patterns are fantastic, when you identify them properly of course!! For a valid top pattern this should appear at the end of a protracted bull market.
They offer a long-term downside target (you use the width of the top to measure lower), this offers a downside measured target to 155.37 (the top extends from 167.52 to 179.67) and this coincides quite well with the 156.22 2018 low. Please note that this is the MINIMUM downside target.
I also use the duration of patterns to give me some idea of time frame for when that downside target is likely to get hit. The top built from August 2019 to February 2022 i.e 2 ½ years, and targets are usually met in half that time – say 15 months.
Mind you I have noticed over the years that the targets from tops tend to get hit faster, so I think under 12 months.
We have two meetings next week - the Fed and the BOE and both are expected to raise interest rates by 25 bps, and with inflation where it is, further weakness looks likely.
Disclaimer:
The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
The STA is the oldest technical analysis organisation in the world and to celebrate that fact, we have a free downloadable book on technical analysis here -
www.technicalanalysts.com
www.technicalanalysts.com