This shows a large topping pattern over the past 2 years (either a Reverse Symmetrical Triangle, or Double Top), this should create strong downward pressure on this pair going forward. - Strong support zone @ 8170 to 8230 held a first attempt earlier this month, and may check the decline again, however I would favour an eventual break through here towards the second major support zone around 7700/7780. -- Weekly Momentum studies are supportive, (See below). The weekly ADX is turning up from low levels with a negative DMI in the ascendancy, suggesting a bearish trend is establishing itself, whilst weekly RSI is only just pushing the oversold boundary, suggesting some way to go before becoming overextended, and MACD shows strengthening downforce.
One further set of charts I wish to post is Greece 10 Year Yield CDS v the Lehman Share price (Inverted) over its final 2 years, the final period being Lehman's death spiral. Note: the strong similarity in the appearance of these charts, and also the peak of the Greece CDS from early May, pre-ECB rescue package announcement, is in danger of being exceeded. The chart below is last night's close, already today the Greek German Spread has widened 66bps or 9% on the day. Greece may be yesterday's story, but may soon become tomorrow's story if it carries on like this.....
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gooner
ReplyDeleteNice chart on the Lehman / Greece comparison. do u have an update in how the other PIIGS cds are doing??
gooner....
ReplyDeleteThanks for tha charts -- I guess that Lehman and Greece may differ in many ways, the Lehman's death spiral would probably be equivalent to Greece going into default,,, which is still probably unlikely, given how the ECB has underwritten them ... However, it will be interesting to see how all this unfolds....
Don -- I do not have access to the intraday price of CDS, but spreads v Germany (as a good proxy), are slgihtly wider, but overall remain relatively calm, and well below highs of recent weeks.
ReplyDeleteYogi - I think this is a unique situation, and as u say the ECB have supposedly underwrittem Greece. So no idea how this will unfold, however we live in interesting times.