Bunds - Are the bulls finished

Over recent weeks German economic data has strengthened, and traders are in no doubt about the role the strong German economy is playing in pulling along the weaker Euro zone and its long peripheral tail. Indeed some traders are becoming anxious about the ECB's intentions with the focus shifting towards when the ECB will begin to tighten policy. While we think that day is still a little distant, the Bund is on the verge of a correction and perhaps a bear market.

The Technical Trader’s view:

WEEKLY CHART

The market has drifted back – through the upper diagonal of the bull channel certainly, but only slightly, with good support beneath the market at 127.60 (diagonal) the horizontals at 126.53 and then 124.60.

DAILY CHART

This is a chart revealing weakness but not bearishness: certainly the small Double Top formed on the break down through the 130.63 Low gave some impetus to the bears,

and the push beneath the Prior Low Pivot at 129.08 may serve to ratchet the market further down,

but the support at 128.29 is substantial,

and so too is the support from the Prior High at 126.53 from March 2009.

The trouble for the bears is that there is no medium-term Top formation in place or in prospect.

Bulls will note this, and the supports beneath the market as well and thus they will remain poised for a bull signal – a bull wedge continuation pattern?

Or a rather shorter term structure that is yet to develop.

In short, we are not bears yet….

DAILY CHART

On the other hand, traders will also notice this chart in the Bobls – German 5yr bonds a little way along the yield curve.

That is a clear Double Top, whose completion coincided with the break of the (admittedly weak) rising diagonal support.

Note the respectably high volume and open interest on the last two days.

Might this not fuel more fresh selling?

This is the medium-term Top that the Bund market lacks – and apart from the obvious tilting of the yield curve implied, it suggests the Bund will remain under pressure in the near term

The Macro Trader’s view:

During the Euro zone sovereign debt crisis the Bund was a strong safe-haven trade. This may seem paradoxical given the nature of the crisis: investors were worried about the solvency of several Euro zone governments, but sought shelter from government default in the Euro Bund.

Why was that?

The Euro Bund is based on the German Bund contract and as the sovereign debt crisis deepened, yield spreads between affected government bonds and German Bunds widened out appreciably. But as the crisis eased the Bund started to lose its safe haven appeal.

At first Bears found stiff resistance from the Bulls as German economic data went through a soft patch, indeed for several weeks it began to look as though the German recovery was going the same way as in the US.

However, over recent weeks German economic data has strengthened, and traders are in no doubt about the role the strong German economy is playing in pulling along the weaker Euro zone and its long peripheral tail.

Now the Bears look on the verge of asserting themselves. Unlike the Fed and possibly the Bank of England, the ECB has never felt the need to flirt with ideas of QE2. Indeed traders are becoming anxious about the ECB’s intentions with the focus shifting towards when the ECB will begin to tighten policy.

While we think that day is still a little distant, the Bund is on the verge of at best a serious correction and perhaps a bear market. One only needs to look at the German Bobl to see where some traders’ current thinking lies.

Ah, you might say, but what about the strength of the Euro, won’t that cool the German economy and give the Bund a fresh lease of life?

While it is always possible a new round of risk aversion could emerge and send government bonds higher, we do not think the Euro will be the undoing of the German economy. Interest rates in Europe are very low: 1.0%. For an economy like Germany’s that is enjoying a strong recovery, interest rates are over-expansionary. Indeed, if the Bundesbank was still in control of German monetary policy we judge rates would already be moving higher.

So given the expansionary impact of Euro zone interest rates we think the German economy will weather the strength of the Euro well. But as the recovery proceeds it will probably be Bond yields that rise and we think we may now be at that point in the Bund.

In the Bobl that milestone has already been passed.

Mark Sturdy

John Lewis

Seven Days Ahead

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EUR/GBP Recovery Repelled by Key Resistance

The FX Specialist view - Following the earlier fall in the EUR/GBP cross a recovery phase has been in process since the June low. However, this has now seen a test of a key resistance area, with the market accordingly pulling back.

• MONTLHY CHART: Prior breaks of support signalled a medium term bear move underway, with a 50% pullback level providing effective support. The current rally is presumed temporary – note resistance here from the old triangle underside has now been tested – so far, s/term reaction here has been negative.
• DAILY CHART: The continuing bull run has now tested the 76.4% recovery which is providing s/term resistance. This ties in with resistance from the weekly chart, so a pullback is not a surprise at this stage. Note support offered by the 0.8532 Jul high, while longer term bears will be looking for a continuation lower and through the more key support area of 0.8400, prior s/term high and bull channel base projection. Violating this latter would imply bulls had lost their momentum.

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Copper Could Pullback Soon

The Commodity Specialist view - Following a 38.2% pullback in Copper earlier this year subsequent recovery breached important resistance which opens the way for a return to the old 2008 peak. Shorter term, though, the signs are building that a correction is due.

• COPPER – WEEKLY CONTINUATION CHART: After the former 38.2% pullback level provided strong support the recovery finally breached former 76.4% resistance. S/term dips are expected to be temporary. Should weakness unfold now note the current 23.6% retracement lies at 3.2500 (not shown).
• COPPER - DAILY CHART DEC-10: S/term resistance has come from near a bull channel top, but a pullback phase will not look likely until price falls through the channel base, around 3.6000 currently. In fact, note that the daily RSI signals s/term bear fatigue via a negative divergence, putting us on the alert for such a correction. Beyond immediate support from the Apr 3.6690 high, and then lower 3.4305 early Aug high, we would focus on the 3.2000 25-Aug low for support, the starting point for the current upleg, and near to the 23.6% level on the Weekly chart.

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FTSE set to go higher

Now that the Public spending review is out of the way, the market has had a hump in the road removed. It can focus on the Bank of England's likely policy response and an economic recovery that will ultimately be built on sound private sector growth in the future rather than the sands of public spending largess.

The Technical Trader’s view:

MONTHLY CHART

The tantalizing possibility that technicians are studying –is the completion of a massive bull Head and Shoulders Reversal pattern.

That requires a second close above the Neckline at 5649 this Friday.

It looks good.

DAILY CHART

The more detailed chart shows how the market has paused beneath the April High of the market and yet has been supported by the Neckline from the weekly chart.

WEEKLY CHART

Earlier today the possibility of a completed continuation Flag was very real – but the market drifted back within the congestion area.

Yet that is still a possibility so watch for a close above the higher falling diagonal currently at 5742.

The Macro Trader’s view:

Global equity markets have been bullish in recent weeks supported by expectations that the Fed will restart its QE program and buy more US Treasuries. The Bank of Japan too, recently cut rates to zero and announced a Bond purchase program which is seen as a prelude to full blown QE.

In the US, deflation is feared but not yet a fact, whereas in Japan it has dogged the economy for years. In the UK CPI has been above target for months, yet the Bank of England appears to be moving towards a new tranche of QE.

We think the FTSE has benefitted over recent weeks from bullish overseas sentiment driven by those factors detailed above. What makes this market look all the more impressive is that for several months the UK Government’s Spending review had been hanging over it like the sword of Damocles. The spending review is now known. The MPC minutes released yesterday morning showed policy makers still edging closer to restarting QE in the UK. Why though, if CPI is so far above target?

The simple answer is that the government has cut public spending by £82.0B. This will see around 500,000 public sector jobs lost with perhaps a similar amount in the private sector, as a result CPI should correct to a level below target allowing the Bank to plug the gap created in the economy with a fresh round of QE.

So rather than fret about the risk of an economic slowdown in the UK due to the spending cuts, investors are looking to the positives and these are:

· High probability the Bank of England will restart QE,

· Interest rates look set to remain unchanged throughout 2011,

· The economy should rebalance away from the public sector towards the private sector,

· The UK economy should benefit not just from easier UK policy, but also from QE2 in the US, and

· The threat to the UK’s AAA rating should now be removed.

In short, now that the Public spending review is out of the way, the market has had a hump in the road removed and can focus on the Bank of England’s likely policy response and an economic recovery that ultimately should be built on sounder private sector growth rather than public spending largess.

Mark Sturdy

John Lewis

Seven Days Ahead

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US Dollar Index Continues To Sag

The FX Specialist view - The recovery in the US Dollar Index earlier in 2010 has largely been undone, although technically it is still unclear if the 2008 low is going to give way. There are various supports before then that need to be breached.

• MONTHLY CHART The earlier breach of the former bear channel top in 2008 suggested a loss of long term bear momentum. Subsequent action may yet prove consolidative ahead of another bull attempt, but we must await clarity for now. Note the previous 76.4% support which could again have an influence.
• WEEKLY CHART This year’s pullback recently violated a 76.4% retracement, testing the rising support line, where s/term support has emerged. Beyond here is the 74.170 Nov-09 low ahead of slightly lower channel base projection at 73.50 currently, which stand in the way of a return to the 70.700 Mar-08 low.
• DAILY CHART: The second bear leg in the move starting in Jun has found s/term support from the bear channel base projection (75.60 currently). Lower down note an equality target at 74.936, Jun/Aug downmove extended off Aug high, which may also prove supportive. However, little in the chart structure suggests that bears are about to tire. First resistance of note remains from the 06-Aug 80.085 low, with falling resistance not much above. A recovery through this latter would be the first sign that downward momentum had diminished.

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Pause in Silver’s Bull Run Should Be Temporary

The Commodity Specialist view - Following a consolidation over the summer months a fresh, unbroken bull move in Silver has seen the major 2008 peak overcome and the first of our Fibo projections reached. There is room for a s/term pullback now, but there’s no sign that the main uptrend is tiring.

• SILVER – MONTHLY CONTINUATION CHART: Recovery from near major support has now exceeded the 2008 peak, testing our initial projection. We have also marked in an equality target, the 2001/2008 upmove extended off 8.78 2008 low, around 2600. Support on this chart comes from the prior 21.185 high, ahead of the 19.80 May high.
• SILVER - DAILY CHART DEC-10: The unbroken bull run reached our next Fibo projection at 25.00, where s/term resistance has appeared. We have marked in two nearby retracement levels, 23.6% & 38.2% - ideally the second one will hold in order to preserve maximum momentum. However, key support doesn’t come in until around the 19.915 May high, where the current bull channel base projection resides. It is more important for this latter to hold now.

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AUD/USD Bulls Push Market to New Heights

The FX Specialist view - Following a May low at a Fibonacci support AUD/USD has shown steady recovery that has now seen a breach of the major 2008 peak. The charts are strong and require calculation of higher targets now.

• MONTLHY CHART: See how 76.4% provided clear support in late 2008. The recovery is now complete, with the 2008 peak exceeded.
• WEEKLY CHART: Here note how the 38.2% pullback provided strong support, sidelining lingering bears as the market refused to weaken again. Breaking the 0.9405 Nov-09 high was a bull sign, with recent breach of the 2008 peak providing further confirmation. The current bull channel top projection implies resistance around 1.0750 and serves as the next target.

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Crude Oil Bulls Beginning to Stir

The Commodity Specialist view - Earlier this year a key reversal month in Brent Crude gave hope to medium term bears, but after initial weakness the subsequent lack of follow-through has now given way to a bout of s/term strength that suggests bears had their chance and bulls are regaining confidence.

• BRENT CRUDE - WEEKLY CONTINUATION CHART: The 38.2% pullback provided good support and the subsequent consolidation was initially thought to be the precursor to further weakness. However, recent gains have exceeded certain resistance (e.g. prior highs on this chart) which implies bear momentum has dried up. This provides an early green light to bulls now.
• BRENT CRUDE - DAILY CHART DEC-10: On this chart the breach of falling resistance followed by the 84.09 04-Aug high were s/term bull signs. The current danger is a slip back and close below the 77.09 23-Sep low, which would negate the break and resurrect bear risk once more. Meanwhile, beyond possible 76.4% resistance at 88.20 there is not much in the way of a return to the early May high.

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Gold is still good

Gold can rally further though markets seldom rally in straight lines. The main reason for Gold's underlying strength is the weakness of the Dollar. Why does that matter?

The Technical Trader’s view

WEEKLY CHART

The market surpassed the minimum target for the large Head and Shoulders pattern established throughout 2008 and 2009, and doesn’t look like stopping anytime soon.

The minimum target for the small continuation Triangle that has formed above that H&S pattern is higher still around 1470 or so.

DAILY CHART

The drive up hard from the completion of the Triangle has been impressive.

The first pause at the Fibonacci cluster of resistance 1369-79 was swiftly reversed and the 1351 High overcome.

But that cluster may yet cause problems….a clear break above would be very encouraging… and for those already low stops beneath 1351 look sensible

The Macro Trader’s view:

Readers of our market updates will be well aware of our long term bullishness for this market. Indeed In the Macro Traders Guide we have been recommending a long position. But this market has rallied hard over recent days making new all time highs. Can Gold continue to rally and what drives it?

In a nutshell yes, it can rally further though markets seldom rally in straight lines.

The main reason for Gold’s underlying strength is the weakness of the Dollar. Why does that matter?

The US is still the world’s largest economy and the Dollar its sole reserve currency. That means that export led economies such as China, Japan and the Middle East oil exporters to name but a few have massive foreign exchange reserves and they are overwhelmingly denominated in US Dollar assets, so they are anxious that the Dollar remains reasonably stable.

But because the US economic recovery remains locked in a fragile recovery, the Dollar is burdened by very low interest rates. Moreover the Fed is concerned that the outlook for US inflation is probably lower than that level it considers to be consistent with a growth rate that both contains inflation but creates sufficient new jobs.

Their response to this increasingly looks like a resumption of QE dubbed by market analysts as “QE2”.

This involves the Fed printing money, or to give it its polite term; creating new Central Bank reserves, but they are in effect printing money. This is a perfectly reasonable policy response in the current environment:

· Low inflation,

· Weak growth,

· Weak Labour market,

· Weak housing market, (home foreclosures in the US hit 100,000 in September for the first time ever).

And is designed to inflate the money supply, raise asset prices and create ‘a little’ inflation. It also has the effect of devaluing the value of the Dollar against foreign currencies.

This is a subtle response to Japan’s attempt to weaken the Yen through foreign exchange market intervention and it also acts against Chinese recalcitrance over allowing their own currency to revalue. While the Rinimbi is pegged to the Dollar, a weaker Dollar drags the Chinese unit with it, but it devalues China’s massive foreign currency holdings which are in excess of US$2.0T.

One way or another, if the Fed restarts QE, the Dollar will weaken and there is little the export driven economies can do to prevent it, so in this environment which increasingly resembles competitive devaluation, Gold looks set to continue its long Bull trend until the market feels the US economy has stabilized sufficiently to allow the Fed to ease off the monetary policy throttle and actually consider a tighter policy stance; that day is a long way off.

Mark Sturdy

John Lewis

Seven Days Ahead

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EUR/USD Bounce Closing in on Stronger Resistance

The FX Specialist view - The recovery in EUR/USD from a Jun low has turned out impressive, with a second bull leg now well underway. This has started to reach certain interesting resistance levels which the market could find tough to overcome.

• WEEKLY CHART Currently a 3-wave, corrective structure is unfolding in the recovery. On this chart note the current 76.4% 1.4373 level as potential resistance, and note how a former 76.4% level was effective in late 2009.
• DAILY CHART: Recovery through the 1.3333 06-Aug high has now breached the bull channel top projection to test our next technical level at 1.4040, an equality target that extends the Jun/Aug upleg off 24-Aug low. Temporary resistance would not surprise here, but the s/term chart structure remains very positive. Possible stronger resistance is offered by the higher 1.4373 76.4% retracement level. Currently we view the recovery as temporary, within the context of a longer term bear trend. First notable support comes from the 1.3333 06-Aug high but, at this stage, it wouldn’t be until the 1.3000 area was broken that bull momentum could finally be said to have dried up.

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No reversal yet in Gold

Is this the end of the rally, the end of the trend or just yet another round of profit-taking?

The Technical Trader’s view:

WEEKLY CHART

The medium-term in the Gold market looks very attractive.

The initial catalyst for the bulls was surely the Head and Shoulders continuation pattern that drove the market today to its minimum target of 1350 or so.

But the creation of a Continuation Triangle has given the market a additional catalyst to drive it better. The minimum move implied by that pattern is 1475.

Look closer.

DAILY Dec 10 CHART

The Triangle has been a powerful bull stimulus.

And the upper diagonal will act as good support on any pull-backs.

Today the market seems to have baulked at the resistance of the band of Fibonacci extensions 1370-1380 and may indeed come back to the 1290 level to test that support.

Certainly the good volumes and rising open interest do not suggest a trend reversal yet….despite the violence of today’s trading.

The Macro Trader’s view:

The latest leg of the long Bull run in gold began back at the end of August, when the market made a succession of new all time highs, but today the market spiked higher and then sharply reversed.

Is this the end of the rally, the end of the trend or just yet another round of profit taking?

First, we need to understand what drives this market. Over the last several years Gold has rallied mainly during periods of Dollar weakness and or geopolitical tension. Most recently the main dynamic has been Dollar weakness.

But Gold is also supported by economic uncertainty and the policy mix that is generating. It is well understood that the Dollar is weak because of the fragile nature of the US recovery, but there are also serious concerns about the strength of recovery in the Euro zone, Japan and now the UK too.

The response from policy makers has been a little different in each case:

1. In the US the administration continues to preside over a very large budget deficit and debt build up with the Fed contemplating a new round of QE,

2. In the Euro zone, fiscal austerity has been the masterplan after the Sovereign debt crisis earlier this year almost broke the Euro, with the ECB supplying sufficient liquidity rather than QE,

3. In Japan the economy remains in the grip of deflation, the authorities are now intervening to weaken the Yen and the BOJ has cut rates to zero and announced a Bond purchase program,

4. In the UK the recently-elected government has put together a severe fiscal consolidation that may cause several quarters of slow growth and perhaps tip the economy back into recession. The response of the Bank of England has been to contemplate a restart of QE.

So in three of the larger economies the Central Bank is either reactivating or close to reactivating QE. The Gold market currently has little to fear from QE regarding inflation, globally it is tame, although less so in the UK.

But what un-nerves investors and attracts them to Gold is the nature of the current economic climate and the policy responses it requires. Quite literally no one really knows how all this will end since other post WW11 recessions have been completely different.

While the likes of Fed chairman Bernanke has studied the great depression at great length no two economic periods are the same. The world is a very different place to the 1930’s with many previously economically primitive countries now economic powerhouses that are challenging the older developed economies for dominance.

This is why we judge Gold is currently so attractive to investors and indeed Central Banks. Since the current environment looks like persisting at least into much of next year, gold looks set to make yet more all time highs, so for us, we are now likely witnessing a correction which should ultimately provide fresh buying opportunities.

Mark Sturdy

John Lewis

Seven Days Ahead

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Wheat Retreat Not Yet Complete

The Commodity Specialist view - Following an earlier surge in Wheat prices a normal correction from an early Aug high developed. After a pause this has got going again, and we look for likely lower supports now.

• WEEKLY CONTINUATION CHART: After the earlier strong surge a corrective phase still looks to be in process. This leaves higher targets such as prior 952.75/ 961.75 highs and the 987.00 61.8% recovery level out of reach for now. Meanwhile the former Nov-09 583.50 high offers next interesting support for a further setback.
• DAILY CHART – DEC-10: Another bear leg has emerged after recent consolidation, putting pressure on the 660.00 Nov-09 high area so far. However, focus is also on lower retracements, particularly 76.4% at 566. This exactly coincides with an equality target (Aug downleg extended off 757.00 Sep high). Note that this lies quite close to the Nov-09 high from the Weekly chart. This therefore offers an interesting support/target area. Overall, weakness continues to be regarded as a temporary affair.

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Wheat Retreat Not Yet Complete

The Commodity Specialist view - Following an earlier surge in Wheat prices a normal correction from an early Aug high developed. After a pause this has got going again, and we look for likely lower supports now.

• WEEKLY CONTINUATION CHART: After the earlier strong surge a corrective phase still looks to be in process. This leaves higher targets such as prior 952.75/ 961.75 highs and the 987.00 61.8% recovery level out of reach for now. Meanwhile the former Nov-09 583.50 high offers next interesting support for a further setback.
• DAILY CHART – DEC-10: Another bear leg has emerged after recent consolidation, putting pressure on the 660.00 Nov-09 high area so far. However, focus is also on lower retracements, particularly 76.4% at 566. This exactly coincides with an equality target (Aug downleg extended off 757.00 Sep high). Note that this lies quite close to the Nov-09 high from the Weekly chart. This therefore offers an interesting support/target area. Overall, weakness continues to be regarded as a temporary affair.

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Gold Bulls Coming Back For More

The Commodity Specialist view - Following earlier 2010 gains in Gold, the pullback in June has proved a short-lived affair, with a fresh upleg from late July having now led to new 2010, and all-time, highs. A current chart pattern calls for a degree of caution, but we must still consider higher targets.

• WEEKLY CONTINUATION CHART: The structure of the whole recovery from 2008 low may still be seen as a type of 5-wave/ impulsive structure, but more important right now is the current wedge-type pattern. These can be reversal formations, but sometimes are the precursor to acceleration higher, in which case note the next Fibo projection on this chart, at 1375. Only a reversal through the pattern base and then Jul low (see Daily chart) would provide a clear bear sign.
• DAILY CHART DEC-10: We also show the wedge pattern here, with initial upside break from this. We now look to higher levels such as a Fibo projection at 1340, which lies just below a bull channel top projection currently. First support comes from the 1270.60 Jun high, although most important at this stage is the wedge base around 1200.

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Impending spending cuts and VAT increases scheduled for the start of 2011 may at best depress growth for a couple of quarters and at worst risk a double dip recession. Despite this the FTSE is only around 200 points off its 2010 highs. Why is that?

The Technical Trader’s view:

WEEKLY CHART

The market has been driven up from the lows by a completed Head and Shoulders Reversal pattern.

The minimum target move ( to 5644) was achieved - and then the market fell back.

But only to find support at the 38.2% retracement around 4900.

Look closer at the bounce from that level.

But note too, the importance of the current market level – it is a potential additional Neckline of a bull Head and Shoulders pattern. If overcome (the neckline level is 5662) the market will receive a large additional stimulus…

DAILY CHART

The day chart is interesting.

Note the tight consolidation of the past few weeks.

And the support from the rising diagonal from Prior Highs.

Attempts by the bears to break that diagonal support have –so far- repeatedly failed.

It’s tempting to look for a structure within the congestion – but there isn’t one.

Yet, on balance, we favour a test of the possible Neckline and the Prior High at 5720.

We are short-term bulls. And if 5720 can be taken out, another medium-term bull leg is in prospect.

The Macro Trader’s view:

Impending spending cuts and VAT increases scheduled for the start of 2011 may at best depress growth for a couple of quarters and at worst risk a double dip recession. Despite this the FTSE is only around 200 points off its 2010 highs.

Not a bad recovery from the lows hit in early July when the market gave up almost 1000 points on a range of anxieties.

The main factors weighing on the market then were:

- The weakening US economic recovery, and

- The Euro zone Sovereign debt crisis.

In truth, neither has been dealt with.

The US economy continues to show signs of weakening causing policy makers and administration officials alike to lose sleep. They ponder how best to re-invigorate the economy.

As for the Euro zone debt crisis, all seemed calm during the summer. But now there are renewed fears about Ireland as the Anglo Irish Bank is in need of rescue. The sum involved is put at one year of Ireland’s tax revenue - an expensive bail out. But the cost of failure would be much greater.

So why then are stocks looking so bullish and in particular the FTSE?

As ever, markets and economies are closely linked. In the US the Fed has let it be known that it stands ready to buy Treasuries if the recovery weakens any further in QE2.

In the UK, the Bank of England’s recent MPC minutes have alluded to a similar course. Policy makers are moving towards a position where they might need to re-activate their own QE program as they now judge downside risks to growth greater than upside risks to inflation due to the impending fiscal tightening.

While one could easily take the view that the economies of the US and UK are in bad shape if both Central Banks need to restart the printing presses, the equity markets take the news positively, since a fresh injection of Central Bank reserves should help spur economic growth.

Moreover there is always the possibility that here in the UK the Bank might opt to skip buying gilts and buy corporate bonds instead, in an effort to get the cash out to main street, thereby by passing the Banks that politicians still accuse of hording cash.

In any event, it is the promise that the US and UK could reactivate their QE programs that is largely behind the current bullishness of stocks including the FTSE.

Mark Sturdy

John Lewis

Seven Days Ahead

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EUR/CHF Recovery Just Temporary So Far

The FX Specialist view - Bears in EUR/CHF have remained in overall control this year, with one notable rally attempt made in Jul. Another halt in downtrend has now been seen so it is worth looking at what more needs to be done to suggest a better recovery phase was underway.

• WEEKLY CHART The long term bear channel base has again tried to support the fall in values here. At this stage we have marked in the current 23.6% recovery at 1.3500 (of the downmove from Dec-08 1.5881 high). A break/close through this would be a positive sign, but also see Daily chart.
• DAILY CHART: In the Commodity Specialist Guide we have been looking at a s/term Fibo projection, which recently impeded bear progress and prompted a bounce. At this stage the first interesting resistance comes from a bear channel top projection, around 1.3685 currently. A break through this would imply serious loss in downward momentum. Subsequent pullbacks would then more likely be temporary. Meanwhile bears must continue to be given due respect.

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