Two consensus long trades test key inflection points Two trades the market has been long this year are TY bond futures and gold. Both are forming descending triangle top patterns by testing major support levels this week.
Gold prices pierce support at 1,315 and enter pre-Brexit levels
Tuesday’s price action led to a daily close below horizontal trend-line support and a new two-month low. The red arrow approximates a measured move target based on the descending triangle top. The break of support suggests gold prices may correct and target 1,250, or the 38.2% retracement of the YTD rally. A deeper retracement could target the 50% retracement at 1,210. Year to date, we see additional support at the trend line and bottom of the Ichimoku cloud from 1,290-1,300.
US 10yr Bond future technical detail
Post Jackson Hole, price action led TY futures to test support at a trend line connecting the January and May lows (red line). It also formed a descending triangle top pattern by closing below 131-27, a bearish implication. However, trend-line support held as markets rallied back on Monday. Trend lines like this are often associated with levels where market participants accumulate (buy) the market. Another bond sell off like Friday, possibly fueled by a strong NFP report, could result in a break of support at 131-12 and the recent low of 131-09. This would put new longs in the red and may trigger a sell off to the triangle target of 130 to 129-18. This also equates to a 50% Fibonacci retracement of the YTD rally. A decline through the RSI adjusted oversold level would add conviction to a decline.
Breakdowns favor tactical shorts in TY, gold and long $
A daily close below 131-09 in TYs could be sold with a stop at 131-27 and target of 130. A daily close below 1,315 in gold could be sold with a stop at 1,335 and target of 1,250. If these supports break, we would also favour long USD vs DM.
US Dollar Index (DXY) rally would continue The rally from trend-line support is approaching resistance at the 200d SMA at 96.30. A strong NFP number that could accelerate the bond and gold decline would also accelerate the rally in USD, especially against DM currencies in the DXY index.
Copyright © 2016 BofAML, eFXnews™
The article is published by one of the foremost sources of Forex trading information. Link to the original article above.
from eFXNews http://feedproxy.google.com/~r/Efxnews/~3/bh79uvvLrDk/two-consensus-long-trades-gold-tys-risk-implications-usd-bofa-merrill
from Online Forex Trading Resource http://its-veso.tumblr.com/post/149753827957
No comments:
Post a Comment