Bonds Look Positive After Yesterdays Price Action

Bunds look quite positive after yesterdays price action, and we would now only worry if we lost the 134.40 support. If we do this then we see 134.30/25 as the short term objective.Here we cover all shorts. We would only re-introduce shorts on a break below 134.25. If we do see this support level broken it could set up a move lower with 133.88/83 the targeted area. Resistance is in the 135.52/54 area, and this resistance band captured yesterdays highs. If therefore we do break above 135.55 we are looking towards 135.70/81 to entice and we would view to cover all long to here and re-sell this market. Bobl initially came lower to 121.31 but recovered well and went to anticipated target of 121.90, reaching 121.91. We have declines from these higher levels thus seeing shorts covered. Now Bobl has closed back above 121.46 and this may well leave scope for a move higher this morning. We look initially at 21.62/65. Cover any longs to here. Reintroduce longs over 121.65 as a break above here keeps the market looking stronger and sees the 121.90/122.05 resistance band trusted. Here cover all longs and re-sell. We keep stops on shorts above 122.16.

Back below 121.31 and we are looking at this coming lower with 121.18/15. The short term objective: Cover shorts, re-sell a break of 121.15 for 120.93 to 120.84. Schatz:Schatz dipped to the 109.40/39 level and rallied off here early in the session to reach the 109.60/62 resistance. Below 109.49/48 sees 109.43 which could hold the downside again today. However if we break below 109.40/39 we can test 109.36/35. Go with a break below 109.32 for a retest of October lows at 109.29/27.Resistance at 109.48/49 but above 109.52 we should see 109.56/55 and if we can get through here we face first resistance today at 109.60/62 which continues to be very tough to break. If we do break higher look for a test of 109.67/68. Above 109.69 today look for109.74/75 and perhaps 109.78/79. If we break through here  oday we should be on the way to 109.85. Gilts: Gilts held on to the 127.35 support as we ran back up to the  27.95/02 resistance and this held the upside.

If we hold below 127.68 this morning look for 127.53/43 and then 127.32/27 support below. Failure here could see us testing 126.92/84 and possibly 126.69/62 before October lows at 126.43/39. Back above 127.68 looks better for bulls and allows a run back to retest yesterday’s high at 127.95/02. If we can push through here today we can test 128.48 resistance. Only a break above the 9 day moving average at 128.65 then allows a test of recent highs at 128.87. Go with a break above 129.13 today for 129.29/34 and possibly 129.72/77 Fib resistance.