Tuesday, November 3, 2015

Bund Review

I was asked to review recent candlestick developments in the Bund and am glad to share these thoughts with a greater audience. 

The December 2015 Bund contract made another marginal new low on Tuesday and has posted 4 consecutive new lows.  A collection of 4 new lows in succession or otherwise is not particularly telling and the individual sessions over the last 4 are not particularly remarkable.  There are two fairly long dark candles, but they are not terribly impressive. 

Looking back a little further however, we would note that the set up to the recent declining price action is a bit more interesting.  There was a decent bullish candle on October 27th that was followed by a ‘spinning top’.  That ‘spinning top’ came at a new 6 month high, so we should follow the reaction off the top closely.  That topping pattern was confirmed by the decline on October 29th.  The three sessions, Oct 27, 28, 29 have a likeness to a ‘three rivers’, though it does not meet exacting criteria. 

In any event, the bearish contingent seems to be testing their capacities and a settle below the Oct 21 closing level of 156.59 might signal additional trouble for newly involved long position holders.  Certainly a settle back below 155.71 would indicate bearish sympathies are growing.  However, a note of caution for current and would-be shorts; in mid-September an almost identical pattern developed that had no immediate repercussions.      


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