Well as we see we have a downward channel after the initial break out through resistance through 8200, after touching 8600, it is likely that we will at least test previous resistance of 8200. We also have a cross on the MACD indicator as indicated above. This could also signal a technical move down further, with the next step being around the 7800 level.
Volume on the run up on this rally has been low relatively which suggests that there wasn't much participation from the big players, which suggests this rally is less believable in terms of sustainability, and a break of 8200 could signal another down move. We are still trading above the 50 day moving average, but unless we have some positive fundamentals out of the economy, technicals point to a downside.
As I write stocks are down again in Europe with Euro Stoxx is down 30, and FTSE 100 down 30.
Bunds are trading 121.50 bouncing sharply from the low, outperforming the short end, as spreads across the bored continue to come off.
Euribor spreads continue to come off as we trade 19.5s on Jun10-Sep10 spread coming off from 22.5 yesterday. I remain cautious in my approach choosing to trade butterflies as it is a better hedge then the outright calendar.
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