From Nic Lenoir of ICAP
Weakness in Fixed Income this morning following hawkish minutes by the Bank of England. Technically we had been calling for a rebound from 117-20/117-28 to about 118-28+/119 for the 10Y future. We almost reached the target for the retracement yesterday. As can be seen on the daily chart there is a key support around 117-26, which if not held would trigger an acceleration straight to 116/116-20. We think medium term this remains the risk ever since we tested 119-23 and failed to break to the upside. Waiting a break below 117-26 or above 119 we would be trade 10Y future in that range.
As I type the S&P future just broke our intermediate support from yesterday at 1,082 which had held quite nicely so far. The key level remain 1,075/1,076. A break there would probably mean we will go test the 1,033 level, support of the open triangle on the daily chart. Watching the Dax in parallel as we have been pointing out the past few days we tested 5,750 as expected. It is key to accelerate here lower, otherwise if we consolidate and fail to go break 5,690 we face a strong risk to go test 5,925. These two levels 1,075 for the S&P and 5,690 should be both watched carefully as they will indicate the medium term direction. The chart of the Nasdaq shows how we posted a bearish candle yesterday on the tops and a major resistance, it is imperative we have confirmation today and accelerate higher. Failure to do so would mean we will extend higher as the RSI shows there is upside potential. Translated in S&P futures a break above 1,091 will take us straight to 1,003/1,007. 1,090/1,091 which was our downside pivot yesterday will be the upside pivot today.
Good luck trading,