FED FUNDS FUTURES: FFG7 Bought

Gilt yields are 2-3bp lower, with a tentative Russia-Ukraine “energy ceasefire” agreement and Russia partially removing its diesel export ban weighing on energy prices in early Monday trade.

• Still, bears remain in technical control, with cycle highs in yields presenting the initial areas of interest for bears (4.971% in 2s, 5.521% in 10s and 6.045% in 30s).
• 2s10s steadies around 50bp after failing to hold breaks above 60bp in recent sessions. Similar picture for 5s30s, back to ~95bop after failing to hold above 100bp. Both curves remain comfortably above September cycle lows.

• RES 4: 116.57 High Aug 13
• RES 3: 115.72 High Aug 26 and a key S/T resistance 
• RES 2: 114.58 High Sep 4   
• RES 1: 111.33/113.06 20-day EMA / High Sep 22  
• PRICE: 110.99 @ 08:01 BST Oct 12
• SUP 1: 109.53 Low Oct 2     
• SUP 2: 108.87 1.000 proj of the Aug 26 - Sep 15 - 22 price swing
• SUP 3: 107.88 1.236 proj of the Aug 26 - Sep 15 - 22 price swing
• SUP 4: 106.77 1.500 proj of the Aug 13 - 20 - 26 price swing

The trend condition in BTP futures remains bearish and a recent fresh cycle low reinforces current conditions and confirms a continuation of the downtrend. Note that moving average studies on the continuation chart are in a bear-mode position, highlighting a dominant downtrend. Sights are on  108.87 next, a Fibonacci projection point. Initial firm resistance is seen at 111.33 (pierced), the 20-day EMA. Gains are considered corrective.

• RES 4: 6442.00 High Sep 8  
• RES 3: 6399.00 High Sep 28  
• RES 2: 6327.09 50-day EMA
• RES 1: 6279.42 20-day EMA 
• PRICE: 6218.00 @ 07:58 BST Oct 12
• SUP 1: 6106.00 Low Oct 8  
• SUP 1: 6096.01 200-dma on the continuation chart
• SUP 2: 6095.79 2.618 proj of the Aug 13 - 20 - 27 price swing 
• SUP 4: 6071.41 2.764 proj of the Aug 13 - 20 - 27 price swing

The short-term bearish theme in EUROSTOXX 50 futures remains intact and last week’s extension reinforces this theme. The fresh cycle low on Thursday confirmed a resumption of the downtrend and signals scope for a test of 6095.79, a Fibonacci projection. Moving average studies have recently crossed and are in a bear-mode set-up - this highlights a dominant downtrend for now. Key resistance to watch is around the 50-day EMA, at 6327.09.