Bund - A reversal ? + FX Updates,

BUND

Interesting price action the past few days. The pattern formed over Friday - Tuesday looks like a possible reversal pattern, or at least a meaningful correction pattern. - The pattern is a 'Bullish Morning Star' pattern, these are usually pretty reliable, though the tech analyst caveat of 'follow-through required' should be added. Of course as all traders know, in the real world, if one waits for follow-through one may miss it, whereas if one acts now, the pattern may turn out to be a dud with no follow-through. - That my friends is why it is called risk-taking. 

Of course this signal is coming up against a very strong and powerful downtrend, which could easily overwhelm it; short-term resistance is at the Thursday/Friday gap at  120.56/63, above here the odds of at least a meaningful correction grow stronger. - It is worth noting, that this week's low is very close to the 38.2% correction of the 2008 to 2010 rally at 119.63. This may add to the idea that we are due a correction. Also supporting this view is the weekly RSI momentum set-up, with this recent low producing 'Bullish Divergence'. In addition RSI momentum has produced an Inverse Head & Shoulder pattern. - I am aware this is an unconventional way of looking at momentum set-ups, however I have noticed similar occurrences occasionally at previous major reversals, such as the 2007 and 2008 lows (highlighted on weekly chart).

Below shows an illustration of a 'Morning Star' Pattern, the current daily chart showing this pattern, and the weekly chart showing RSI.

FX Update

EURUSD - The breakout of the 1.4280/1.4300 last week has followed through well so far.
1.4280/1.4300 should now act as support for pullbacks..... I think a push to the high 1.4000s remains on the cards.

EURCHF failed to follow through on the upside, though I still think the 'Double Bottom' pattern formed on the weekly remains a favourable development.
Support on the downside is 1.2930/50 and then 1.2840. A clean  break of 1.3200 is needed to confirm the large Double Bottom pattern, with upside targets at 1.4000.

USDJPY. I think we have a valid upside break on this pair, however this move lower is straining that view.

I feel it needs to probably hold the mid/low 83s, if so then I still fancy a run at the upside, below 83 may however cause a re-think.