Bond Technical Strategy – Weekly by Lloyds TSB

The technical scenario for bonds remains bullish, but once again this view is sprinkled with a degree of caution. Gains since last week have been aggressive and the acceleration in the price action we are currently witnessing looks more conducive to short covering and perhaps a scramble to enter the market rather than a strategic assessment of future conditions.

The technical scenario for bonds remains bullish, but once again this view is sprinkled with a degree of caution. Gains since last week have been aggressive and the acceleration in the price action we are currently witnessing looks more conducive to short covering and perhaps a scramble to enter the market rather than a strategic assessment of future conditions.

As always, the price action dictates the strategy, and until specific reversal patterns are seen, the bullish scenario continues.With caution in mind, US 2 year notes are being closely monitored. The price action has failed to record a higher print since the 28th November, despite bullish news flow. Whilst this is not the only criterea for a top, another week of sideways price action could be enough to reverse
sentiment.

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