USDJPY TECHS: Resistance Remains Exposed

• RES 4: 122.35 2.500 proj of the May 14 - 20 - 21 price swing
• RES 3: 122.00 Round number resistance 
• RES 2: 121.73 High Jun 13 and the bull trigger 
• RES 1: 121.70 High Aug 5
• PRICE: 121.48 @ 07:04 BST Aug 5
• SUP 1: 119.59 Low Jul 25 and key short-term support         
• SUP 2: 119.48 Low May 26 
• SUP 3: 118.87 Low May 21  
• SUP 4: 118.51 Low May 14 and key support 

The primary trend condition in BTP futures is unchanged, it remains bullish and recent weakness appears to have been corrective. A doji candle on Jul 25 highlights a potential bullish reversal. A continuation higher would open 121.73, the Jul 13 high and a bull trigger. Clearance of this latter level would confirm a resumption of the uptrend. Key short-term support has been defined at 119.59, the Jul 25 low.                     

See our daily EGB supply document here

Germany, Spain and France look to hold auctions during the remainder of this week, while Germany and Austria have already held auctions. We pencil in issuance of E24.7bln, up from E17.2bln last week.

• Germany will return to the market today to hold a 15-year Bund auction. On offer will be E1.5bln of the 1.00% May-38 Bund (ISIN: DE0001102598) alongside E1.0bln of the 3.25% Jul-42 Bund (ISIN: DE0001135432).

NOMINAL FLOWS: This week sees E0.7bln of redemptions, of which E0.6bln is from a formerly 3-year LithGB, while coupon payments total just E0.2bln. This leaves estimated net flows for the week at positive E23.7bln, versus negative E26.2bln last week.

• RES 4: 93.13 76.4% retracement of the Jul 1 - 18 bear leg     
• RES 3: 93.00 Round number resistance
• RES 2: 92.89 1.0% 10-dma envelope
• RES 1: 92.84 High Aug 5
• PRICE: 92.75 @ Close Aug 5
• SUP 1: 91.86 20-day EMA  
• SUP 2: 91.44/08 Intraday low / 18 and the bear trigger
• SUP 3: 90.97 76.4% retracement of the May 22 - Jul 1 bull leg  
• SUP 4: 90.59 Low May 29       

Gilt futures traded higher again Tuesday, building on the gains posted through Friday’s sharp rally. This marks an acceleration of the current bull cycle - with prices breaching resistance at 92.15, the Jul 22 high as well as 92.74, the 61.8% retracement of the Jul 1 - 18 bear leg. The 76.4% retracement is at 93.13. On the downside, key support and the bear trigger has been defined at 91.08, the Jul 18 low.