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Tuesday Macro Technicals - 10 Jan 2017

Here's the regular 5 macro technical charts (going as far as individual commodities, currencies, bonds, and sectors, as well as the rest of the major indexes and benchmarks). No comments on anything except the technical/price developments (albeit we will typically cover the broader case in the Weekly Macro Themes where the technical and fundamental set up produce a compelling investment idea). Even if you're not technical analysis minded it's a useful way to keep on top of trends in some of the main financial markets and as a prompt for further investigation...

1. US Treasuries - Oversold

-US treasuries look oversold with the composite sentiment index (includes positioning, flows, implied volatility, and breadth) hitting extreme pessimistic levels and then turning.

-Looking at the chart of the yield it stopped right at resistance of around 2.50%, time will tell if this resistance point becomes support (after a new breakout).

-Expect a period of consolidation before any retest higher: 2.60% is an important trigger point.

Overall technical view: Neutral, expect a period of consolidation; wait for a breakout.

Picture of US 10 Year treasury yield at resistance
Bond sentiment index vs bond yields

2. JGBs - The Trendline

-Despite a 0.38ppt selloff to around 0.09% (last trading around 0.05%) Japanese Government 10yr bond yields remain safely inside the trend line.

-Even if the trendline holds there's still as much as 10-20bps for it to go depending how long the move takes.

-Like it's US counterpart it's undergoing some consolidation, and a break of 0.10% will be very meaningful.

Overall technical view: Bearish bias, watch for a break of 0.10%

Japanese government bond yields long term trend line

3. Crude Oil - Consolidation Time

-Speculative futures positioning topped out and rolled over at the top of the range (a bearish signal).

-Seasonality is usually "ho-hum" for the first 2 months of the year before kicking into a strong patch.

-Could go as far as a test of support of $49-$50 while a breakout from $55 will be important and probably spell the end of the seasonally soft patch (or an overriding - seasonality doesn't always work).

Overall technical view: Short-term neutral, wait for a better setup (positioning/seasonality/breakout)

Crude oil futures positioning chart
Crude oil seasonality goes from ho-ho to ho-hum

4. Mexico - Head and Shoulders

-Head and Shoulders top pattern confirmed on Mexican ETF (technically not a top in that it appeared at the bottom of a move, so instead you would call it a bearish continuation pattern - same implication though)

-Relative performance vs its US equivalent provides strong guidance on direction (down)

-Strong and clear downtrend, risk of a bounce at some point, but the H&S pattern implied at least a move down to test the $40 mark.

Overall technical view: Bearish; bearish entry point triggered after consolidation in a down trend.

Mexican equities bearish head and shoulders pattern

5. Gold - Bottom?

-Gold looks to have found a bottom around longer term support zone of 1150

-Speculative futures positioning has been washed out; not quite to previous lows, but certainly back at the bottom of the range; reversing the extremes on the long side seen previously.

-RSI has turned up after going oversold, the psychologically important 1200 level will be key.

Overall technical view: Bullish bias, but be on alert for any renewed weakness.

Gold support line

gold futures chart

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