OUTLOOK: Price Signal Summary - Corrective Cycle In Bunds Still In Play

• In the FI space, Bund futures are unchanged and continue to trade closer to their recent lows. The move down that started on Oct 17 is considered corrective and this has allowed an overbought trend condition to unwind. Initial key support at 129.46, the 20-day EMA, has been breached. This exposes the 50-day EMA, currently at 129.10. For bulls, a reversal would refocus attention on the key resistance at 130.59, the Oct 17 high. First resistance is 130.07, Oct 24 high.
• A bull cycle in Gilt futures remains intact and yesterday’s fresh cycle high reinforces current conditions. Note too that MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are the 94.00 handle next. A break of this level would pave the way for an extension towards 94.24, a 1.618 projection of the Sep 3 - 11 - 26 price swing. The contract is overbought, a pullback would allow this condition to unwind. Firm support to watch 92.41, the 20-day EMA.

The EU has announced it will be looking to sell the following at its auction next Monday, November 3:

• Up to E2.0bln of the 2.50% Dec-31 EU-bond (ISIN: EU000A3L1DJ0)
• Up to E2.5bln of the 3.375% Dec-35 EU-bond (ISIN: EU000A4D8KD2)
• Up to E1.5bln of the 3.375% Oct-54 EU-bond (ISIN: EU000A3K4EY2)
   

• On the commodity front, Gold traded lower Tuesday, extending the bear cycle that started Oct 20. Note that the trend has recently been in overbought territory and the deeper retracement is allowing this condition to unwind. Attention is on the next key support at the 50-day EMA, at $3842.8. A clear break of this average would strengthen a bear theme. Initial resistance is at $4161.4, the Oct 22 high.
• Recent gains in WTI futures appear corrective for now, however, note that price has traded through the 50-day EMA, at $61.10 The breach of this average signals scope for a stronger recovery. A resistance at $62.34, the Oct 8 high, has also been pierced. A clear break of it would expose key resistance at $65.77, the Sep 26 high. Key support and the bear trigger has been defined at $55.96, the Low Oct 20.