Article / 04 September 2014 at 15:06 GMT

Why it could be looking bright for Euro bond futures

Technical Analyst / Saxo Bank
Denmark
  • ECB lowers interest rate again
  • Euro bond futures can rise further
  • Short-term minor corrections can be seen 

By Kim Cramer Larsson


The European Central Bank lowered the interest rate earlier today  —  again. But how does it look from a technical point of view? Let's have a quick look at the short- and longer-term picture on Euro Schatz and Bund.

Schatz 

In Q2, Schatz broke out of the bearish trend channel it had been trading in 2013, forming a symmetrical, triangle-like pattern this year. It is close to reaching its highest peak in that triangle, which would be the minimum price target, at around 111.

Back in 2012, it was actually a double-top pattern. If we see a close above 111, the bullish move could be extended to around 111.35. RSI is pushing towards overbought but no divergence can  be seen.

Schatz week
Source: Saxo Bank

Short-term, Schatz has been quite choppy as there is divergence on RSI. Look out for the rising trend line (orange line).

Schatz daily
Source: Saxo Bank

Bunds

Euro Bund: Although RSI is in overbought territory there is no divergence on either the daily or the weekly chart, which indicates that Euro Bund can move higher. 

Bunds weekly Source: Saxo Bank

Short-term, it is a sign of weakness that Bund is dropping back after it was lifted earlier on the back of the ECB announcement. However, as mentioned previously, there is no divergence on RSI and no divergence on MACD. Currently, RSI is testing the 60 threshold. Look out for a close below, which can signal a correction down to around 150 ie  testing of the rising trend line. 

Source: Saxo Bank

-- Edited by Kevin McIndoe

Kim Cramer Larsson is a technical analyst at Saxo Bank.

4y
rajan vairawanathan rajan vairawanathan
This comment has been redacted
4y
danevagirl danevagirl
This comment has been redacted

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail