Bunds; Bearish ScenarioThese massive AB=CD and Alt Shark patterns have formed a formidable resistance for Bunds.
Good luck,
Ali Sharif Azadeh, CFTe
BUND trade ideas
Start looking at 4H time frame too (no firm signal yet)Add to my yesterday post (pls see link below)
4H:
- Ichimoku is still bullish with support ard 159,25-159,50
- Heikin-Ashi started to show hesitation close to possible wedge top, and major horizontal key level of 160,50. Some negative divergence signals in haDelta and EWO.
- Short term 159,70 +/- retracement is possible, more counter trend selling would take place below 159,25 and 159.
Watch Kumo, trendline, Kijun and 100WMA!
Obviously if price dips on 4H until close, that will print a small body inside candle on daily too, showing weakness in momentum. Check it again at the end of the day!
Still bullish, but... and if...Both time frames are bullish in all terms, BUT there are negative haDelta divergences on both time frames too!
This Bull market can run further IF:
- Weekly chart closes higher above 160,55, which implies a sub 0,40 % yield on 10y German cash Bond
- Draghi loads more QE immediately
- Global risk off goes even more wild and people use Bund as a safe haven asset to buy... actually I don't know how much an already over-leveraged 10y Bond of Germany can be a safe haven, where the country's biggest bank (Deutschebank) is running a derivatives book of well above 54 TRILLION EUR, compared to Germany's GDP of ard 2,8-3 Trillion Euro and to the whole Eurozone's GDP of 9,5 Trillion Euro.
Also the Germans are making it clear by now they hate Draghi for robbing out their savers and pensioners through artificially low (negative) rates and distorted bond prices, just to back Italy, Spain, Greece, etc. Well, it is hard to digest when you have to "pay back" :-)
So for me Bund is not a safe haven. For me it is a risky asset, especially since April/2015 price action. It is a ticking time bomb, but of course this doesn't mean you have to bet against it until it delivers bearish signal.
Supports are:
- weekly: 157,75
- daily: 158,70 / 157,75
I will switch to 4H before ECB to check where could be a possible swing short entry level in case ECB disappoints.
Bund - 15M - DoubletopHistory repeats itself? Looking to sell the retest if we indeed go lower from here.
Still bullish. Pull back finished at daily Kijun yesterday.Weekly:
- Bullish Ichimoku
- Bullish Heikin-Ashi
- Tenkan 157,07 (same as daily Senkou B and Kijun!)
- Kijun and Senkou B support at 154,60
Daily:
- Trend is still bullish. Let's see if delivers a higher high.
- Ichimoku is bullish, with key support moving higher to 157,00+ level.
- Heikin-Ashi shows correction was done yesterday at 156,85-157 key support. Candle + haDelta shows consolidation. Bullish continuation depends on haDelta/SMA3, which should confirm with a cross back above zero line.
- EWO is still positive
So far the trend is still up. The question is if the trend is limited on further gains? All time high is close at 160,50+, and important supports (averages) moving higher.
Important levels are: 157 and 154,60.
On Twitter I called for a swing short few days ago. That worked quick and really well. However based on the underlying trend and supports I closed my shorts in last two days at 157,40 average (open avg px was 158,75).
Despite the trend is up, I don't like holding a 10y German bond futures at such a low yield respectively. In the long run I prefer to sell on rallies.
Bullish, but care your longs! It may print a local top.Weekly:
- Ichimoku is bullish biased, but Bulls need to push it above resistance to be comfortable with longs. Please note that March16 contracts trade 185 points above Dec15 (which will expire on 8th Dec). Maybe simply due to contract change this continous chart will go higher again.
- Heikin Ashi is bullish, but at the end of this week we need to check again if we see some drop in momentum (haDelta)
- Ultimate lower key level is 154,60 for any bulls and of course for the biggest Bubble Bull: the ECB
Daily:
- Trend and Ichimoku setup is bullish, but for further validation Price should make a higher high. As Yield is approaching 0 level again, it will be harder and harder by time.
- Possible WARNIN from Heikin Ashi: we have seen negative divergence building in haDelta for last 3-4 days. I mean price ticked higher, but with decreasing bullish momentum. Today we can have a warning candle in form of a Doji, which would indicate a possible local top and start of consolidation.
- EWO is still bullish, but if Price makes only a lower high, then EWO won't go higher eaither
Take profit on longs, get ready for a swing short!
One more round of buying?As I wrote on Twitter yesterday, we likely saw the local bottom and a long entry had a good risk reward close to 155,
Weekly:
- Price back to the Kumo cloud. Ichimoku setup is neutral. Strange how Tenkan and Kijun deverge, this is a rare and mixed signal too.
- Heikin Ashi is bearish, but the situation is not yet lost for "Draghi and Co.". In coming weeks Price may pick up again sending Chikou Span above Kumo as well and thus resume a bullish picture.
- Question for next few months is if we see a higher high above 160,50 or only a Lower high? Oh, Jesus save the ECB! Otherwise they will try to play God again as they will have to put a bid under mkt at some point :-). Ok, I am sarcastic, but the real bubble is seriously building in bond mkts...
Daily:
- I adjusted the trend channel (less steep) and it is still bullish.
- Ichimoku has lost its bullish picture, became kind of neutral, but Price seems to start moving higher again from Kumo support. 156,65 should be cleared for a new bullish confirmation.
- Heikin Ashi signals a possible bullish revresal. Need confirmation in form of green candle and smoothed haDelta to move above zero line.
Don't worry, Central Banks (especially ECB) will not let it break down before December. Even next year they will try to blow it further for a while, so we will have planty of opportunities to go short higher and sell more Call options. For now, with high probability we will see another wave of buying.
Bund update - heading towards a double top. Slowly sell CallsWeekly:
- Bullish
- Heading towards a double top... God save bulls if Draghi & Co. doesn't deliver in December! But until they can hold longs. :-)
Daily:
- Bullish Trend continues. Channel and Ichimoku Kumo cloud clearly marks the trend and the increasing support level.
- Support is coming higher to 157.
- Heikin Ashi suggests some consolidation starts. Maybe a minor pull back is possible to 157,25-157,50. Not surprising! Why to buy this here, when US bond yields started to tick higher?
I keep on selling January and February Call options in 160-161,5 strike range.
Draghi forces!Lending Germany at 0,50 % for 10 years?Sell CallsWell, I'd rather lend Germany than Japan for 10 years, but who the hell on Earth believes we won't have more than 0,5 % Inflation on average in the next 10 years??? Of course buyers are not buying all the shtloads of EU debt because they offer a great value, but because they are forced by the ECB to do it.
Look at Italy! The totally bankrupt country which delegated Draghi to ECB has 2 year bond yields in negative yield first ever in history!!! hahahaha OMG. People pay to hold Italian Debt. So what do you think about QE and Draghi now? ;-)
Of course this whole sht will end very badly, once ever savers realise they got robbed out on massive negative real interest rates, and when they realise the global debt is just increasing further, while there are less structural reforms.
Ladies and Gentlemen, the King(s) is (are) already naked!!!
OK, the truth here is that Italy's Monti is at least using this grace period of zero funding costs to do some structural reforms... maybe he'll have enough time to try the almost impossible... turn a countries economy back on a sustainable path. but the others?
Back to German Bunds.
Weekly:
- Ichimoku is more bullish biased. Key support level is ard 154,75-155
- Heikin Ashi is bullish. haDelta makes a new confirmation this week.
Daily:
- Bullish Ichimoku, bullish trend channel. Key support is ard 155,50.
- Heikin Ashi is bullish.
German 10y yields at 0,50 %. Should we fade this and short an otherwise bullish market? I don't think so. Why to fight with it here and now? However, closer 0,10 - 0,00 % I would certanly do it anyway. So the idea is:
Sell Jan/16 160 and 161 calls! They offer a nice premium, while I doubt that on any increase of QE the cash mkt yield would drop much below zero on 10 year bonds!
Bund: Rising wedge spottedBund's forming a rising wedge advance, which looks like a terminal pattern ending in a lower high.
A similar pattern is in the TLT chart, and probably also forming in the S&P500 in the coming days.
Time at mode trend signals have failed and led to a retest of the mode, and a new uptrend signal, and then a second one confirming this week after the close. I like how Rgmov isn't confirming this advance, so I'd be waiting to short the top, which promises a very sharp resolution to the downside, possibly retesting the 148 to 138 zone, making yields attractive again once there.
This setup will take patience, but keep a close watch of it, the timing might be way faster than what the trend signals suggest, and might merely be a matter of reaching the target prices. Entering the zone between 159.34 and 157.88 would give me enough incentive for a short already.
Good luck,
Ivan.
Neutral on weekly, bullish development on dailyWeekly:
- No change in Ichimoku - Neutral with bullish bias
- Some noise undecision in Heikin Ashi due to FED and previous selling pressure in ZN (US 10Y) this week, but wtih the pop yesterday and today it remained bullish biased
Daily:
- Supports held precisely!
- Ichimoku is back to bullish (Price back above Kijun + Tenkan/Kijun strong bullish cross)
- Hekin Ashi back to bullish
- Supports are 154 / 152,90. Resistance: 156
Global monetary policy will very likely remain extra lose, or will go ultra hyper lose next year. Not yet time for major bond shorts!
Bund - Slow bullish march on more ECB pledgeMr. Draghi and since his speech more of his colleagues at ECB has promised they will continue QE until Sept/2016, what's more now we have some hints maybe even longer if needed!
Meanwhile China and whole EM world has started to export DEFLATION to the rest of the world, so it looks like rates and yields are not in danger, at elast for some more time they will not blow up. Probably clueless investors and robbed savers will do the same mistakes again, they will go further out on the curves, take riskier bonds, and build more leverage on long side to be able to produce some visible yield.
All these can be supportive for the 10y German Bund too.
Weekly:
- Ichimoku setup is neutral with some increasing bullish bias: Price is in the thick Kumo, but seems to be able to move back above Kijun Sen (9 weeks average) and above future Senkou B line (52 weeks average) again. These lines, which not just stay appr. together, but have been flat for a while represent the longer term equilibrium price level.
- Heikin Ashi signal turns bullish: green candle, haDelta/SMA3 bullish cross above zero line.
Daily:
- After 100 WMA and brief Kumo retest Pice started to climb again, and trades a bit above Kijun Sen by now. Momentum is not very strong, but the picture is bullish.
- Heikin Ashi tells the same story. Bullish picture, with a bit lower momentum.
Looking at this "ballanced, low momentum" bullish move, I have to ask if it is a signal of decreasing bearish sentiment on global equity markets? I mean this time Bund doesn't act like when it trades as a safe haven during equity selloffs.
Anyway, all instruments have to be treated as separate individuals. Don't try to trade something based on other assets price action or behavior!
Bunds; Critical Days AheadWe are witnessing extremely critical times. I see the price action from the lows more corrective than impulsive. We are the upper area of the channel with an AB=CD in a massive change of polarity zone.
I see bulls having hard time breaking this zone. This would imply EURO strength and DAX weakness.
On the other hand, I see EURO going down against Aussie and Loonie.
This week and next will solve this puzzle.
Beware and good luck,
Ali Sharifazadeh, CFTe
Hurdles for the BuindResistance zone, 200 day SMAVG above and a number of oscillators indicating overbougth
Relationship between Bund and Euro US DollarWhat is the Bund?
The Bund is the German 10-Year Treasury bill, also known as a government bond. A holder of a bond is a creditor, and the issuer of a bond is called a borrower or debtor. When the price of the Bund increases, the yield received on that bond decreases and vice versa.
What is the relationship between Bund and EURUSD? Why is this relationship there?
The relationship between the Bund and EURUSD is inversely correlated - when the yield of the Bund increases, the Euro is bullish, and when it decreases it is bearish. One thing to note is that the price of a bond and the yield received is also inversely correlated.
The relationship is there because during periods of uncertainty, people generally look for less risky positions (they may liquidate any equity positions they may hold and invest in bonds if they have low confidence in the stock market). This new demand for bonds pushes the price higher, but forces the yields down. A quick equation can show why this occurs:
Let's say we have a bond priced at £1,000 with a 10% coupon rate (the amount you can expect to return per annum). The equation would be (£100/£1000) where yield = coupon value/price of bond. If the price of the bond increases to £2000, the yield decreases (£100/£2000) = 5% PA.
For a bond holder looking to sell the bond at a later date, this is good as they have already locked in the rate of interest that they will be paying. However, as a buyer of a bond, you want to be buying low to lock in a higher yield.
A concise explanation about what influences bond prices can be found at Investopedia (www.investopedia.com). I have borrowed from that below.
The factor that influences a bond more than any other is the level of prevailing interest rates in the economy. When interest rates rise, the prices of bonds in the market fall, thereby raising the yield of the older bonds and bringing them into line with newer bonds being issued with higher coupons. When interest rates fall, the prices of bonds in the market rise, thereby lowering the yield of the older bonds and bringing them into line with newer bonds being issued with lower coupons.
Bond yields and FX
The spreads of the 10Y bonds can be used to gauge the direction for currencies as well. When the yield spread increases in favour of a certain currency, it is likely that you will see that currency appreciate vs others. When a yield spread tops or bottoms out, you can expect the related currency to begin to fall/rise in the following months. Playing on interest rate differentials is known as carry trading.
Above graph explained
The Bund is testing back to its 200 day EMA. On the recent occasions when it has tested here, it has failed to break above, however, the upward momentum appears to be intact .
In the short term there is clear divergence between Bund & EURUSD.
Furthermore our model shows the Bund as being a weakest bear suggesting it would like to go & turn bullish and indeed it would be back in a bull trend through 154 vs close last night of 152.9.
Form your own opinions.
Losses may exceed deposits.
BUND - Bears still dominate market- Ichimoku setup remains bearish. Kijun Sen stopped short term buyers again, Price turns down from 152+ bearish support.
- Heikin Ashi showed undecision yesterday, and sell signal confirmed today.
I am just thinking about the meaning of this price action:
1. Maybe market is not scared of this Greek story at all. Bund doesn't act as safe haven, no panic buying.
2. Maybe QE's possible effect on long bonds is still overpriced and/or long term inflation expectations started to increase. (bond curve gets steeper)
3. Maybe market continues to price in longer term economic recovery in Europe in general.
4. However what is sure (not maybe) that German Bund (and I think bond markets in general) will be bearish.
BUND - 5th bearish wave started from Kijun supportAs expected, the pull back worked, Price retested Kijun Sen, which again proved to be a strong bearish support.
Bund is still a sell. The 5th bearish wave has started today. Let's see how deep it goes.
However looking at the weekly chart, I have the feeling that we will see some normalisation in volatility. That means we'll see less agressive moves, and maybe smaller Heikin Ashi candle bodies and/or shorter wicks. HA Candles may start to form a pattern of consolidation within the thick weekly Kumo, ard the 100 WMA. In case later it pulls back higher, I'd still be a strategic seller close to 154.
p.s.: I closed my counter trend long in time, but as I am just back from my holiday (still earlier a bit than originally planned), unfortunately I missed this sell opportunity ard 152 this time. I have no position in Bund right now.
DE-10Y-BUND M30: Down ChannelIt's a pretty strong bear market here. Short positions are still favored, esp. if we see another "pin bar".
Bund - Bears, Relax! Pull back to 152?What a collapse! Of course I closed my previous short too early, but never mind, on such a volatile mkt like Bund is recently, it is hard to call bottoms and these kind of profits in 2-3 days are still quite good.
Watch out now! Bund reached important resistance on weekly. We will likle ysee some pull back up to bearish supports. I opened some counter trend long
Weekly:
- Extreme selloff pushed Ichimoku setup to neutral from bullish. We have a weak bearish Tenkan/Kijun cross. Neutral setup will remain for a while, as Price will likely stay and do more choppy trading in the thick kumo ahead.
- Price is also below 100 WMA! Heikin Ashi signal is bearish, but haDelta once more reached and extreme low. I doubt we can see such a long body bearish candle soon again. More likely we'll see some pull back, similar to the one that happened three weeks ago.
Daily:
- Some says "Never catch a falling knife". I agree, unless you see some signals that the knife might not fall further. Even then be cautious, trade only 1/3 or max 1/2 trade unit size, because you trade against the major trend, and also due to extremely increased volatility.
- Ichimoku setup is heavy bearish, with trend supports at 152 (Kijun) / 153 (Trendline) / 154 (Kumo). Price has built a steep bearish trend channel, and seem it has reached a possible interim bottom within this channel.
- Heikin Ashi signals decreasing bearish momentum. Inside body candle with no lower low, and as I write this post now with even a higher wick! haDelta/SMA3 slowly ticking higher with positive divergence.
Retracement to 152 +/- is possible. There probably we'll have to look for new sell signals again.
I opened 0,5 trade unit long at 149,35 today. Maybe I will add 0,5 more if I see confirming Heikin Ashi candle signal.
Once again, be wise with position sizing and with stop when you trade this beast, espec. if you trade long!
Where To Look For An End To Bund Rout?The support area in the rectangle has some unique characteristics that makes it a good place to expect the recent Bund sell-off to halt:
1- Trendline
2- 50% Retracement
3- Change of Polarity zone
Until that area, I don't see any reliable support on the chart and expect the Bund price to keep falling.
Good luck,
Ali Sharifazadeh, CFTe
Short Bund VS ECBRisk Disclaimer -Technically it look right but fundamentally the ECB is backing the Bund. Will you fight it?
Short at 156.02 (or start building from 1.55.90)
Stop at 156.56 (risk is 54 pips)
Target 1 at 154.07 (Gap with reward at 195 pips)
Target 2 at 153.92 (Gap with reward at 210 pips)
BUND - Is the tragedy over? We currently see a correction of the massive selloff, which triggered some panic all around the financial space. Investors, espec leveraged guys started to panic, bears who had been chasing it before and missed the break started to panic, aaaaaand especially the guys at ECB started to panic: "WTF??? Collapse in bonds when we do QE? + EURUSD up to 1,15 from 1,05 when we wanna fck our ccy? .... Guys Let's just frontload QE to May and June!" .... ah yeah, and don't forget to inform our best Hedge Fund manager friends a day before... ;-)
I can tell you stg, which historically and statistically is probably true: fckrs tend to fck things up in the long run! + They always try to fck around meanwhile a bit :-)
But seriously... this Central Bank is probably the most idiot of all. I don't say everybody is so stupid there, but as an institution its a crap IMHO. They are always behind the curve, they let the mkt to frontrun them for 8 months, they started somthing totally unnecessary, as I still believe QE was not and is not necessary in terms of fighting against deflation. (Where is deflation???). They cause further asset bubbles and force the whole world into excessive and irrational risk taking, which had and will have even more serious consequences.
And this is the point we arrive to Bunds (and to long end European bond yields in general)
Look at what happens when mkt suddenly loses confidence and all its buying power on an extremely leveraged product! Look at the chart and think what a move like this causes to P/Ls and VaR limits. Think about what could have happened if ECB had not stepped in to intervene.
This pattern will repeat more times, and it will be more and more dangerous. Why? Because Bund and European yields' pricing is simply stupid and can not be fundamentally justified at these levels in the long run. They are just distorted by central planning.
"Believe me", in a longer period of time (e.g. 5-10 years) nothing is bigger than the mkt itself, not even a Central Bank! And what is mispriced will be repriced to reality, and will be repriced even quicker if you force investors to pick up dimes in front of a bulldozer. This means the ECB may think they are powerful, but through leverage their power is multiplied to form a monster, and the monster they create can finally destroy everything. Do they have an exit strategy for this?
So for the future I think the following is the risk: ECB heats leverage further, while macro picture improves quicker in Europe, but they don't acknowledge it. EUR startes to be squeezed and stregthens, bonds start to sell off from time to time, periferia spreads widen, this will cause more volatility and more repricing of risk valuations and models, at some point it will hit equities too. If meanwhile CPI picks up (and people forgot what a beast it can be when it starts to jump), commodities will generally reverse from bearish to bullish, espec when EURUSD reverses.
Anyway, this is just a theory for the future. Until and then trade the charts and price action which stand for itself!
