Sunday, June 21, 2015

German Bund 10-Year Yield Daily Chart

The German 10-year yield is a remarkable story this year. Money flocked into the bund sending yields down to 0.04%-ish, under the 0.10% level, then whammo, the yield skyrockets to 1.04% in only six weeks time. It is shameful how the Fed, BOJ, ECB and other global central bankers have destroyed the markets over the last few years.

The green channel lower ended due to the positive divergence with the indicators that bounced yield higher off the bottom. The neon line shows a two-leg bull flag pattern playing out from 0.04 to o.70%, call it 0.6% difference to keep the math simple, for the first leg, and then the sideways consolidation with a slightly downward bias, then the second leg began at 0.50% targeting 1.10% (0.50%+0.60%) which was basically tagged a couple weeks ago. The selloff in bunds is historic (traders ran from the bund so prices drop like a stone rocketing yields higher). Traders abandoned the so-called safe haven.

The red lines show the top in yields due to the negative divergence, and the spankdown sends yields lower to currently test the 0.75% 20-day MA support. The 50-day MA is ramping  higher and will intersect the 200-day MA at 0.59% over the coming days forming a confluence of support. The indicators remain weak and bleak so any bounce that occurs will likely give way to lower yields perhaps targeting the 0.55%-0.60% area. Bunds may stabilize after that moving sideways. If Greece turns sour and general turmoil in global stock markets develop, traders will seek the bund safe haven again and a sideways move through the 0.30%-0.65% range would be in order. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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