Bund - Interesting set-up could suggest deeper correction ahead.

The Bund (German 10 Year future) rally may be petering out, the past few days has seen a sharp correction from last weeks high. There are indeed signs that it may be preparing for a deeper correction. (Which would presumably favour further risk-on activity). - Before I outline my thinking, this is counter to a very strong trend, and may merely be a pause within that trend, however, there is much to suggest that a deeper correction is a good possibility.

The Chart below shows the Daily Continuation Bund Future.
Here are the technical signals:
1) Major trendline break.(Yesterday)
2) Bearish 3 Crows Pattern.  (Past 3 days). - (Follows a similar pattern 2 weeks ago)
3) Potential Double Top Pattern (Needs a high volume break of 135.12 to confirm)
4) Strong Bearish Divergence on momentum. (Triple divergence on RSI, Double on MACD).

The Double-Top Pattern is not yet confirmed, but if it was, it would also be the first significant lower low since April and would strongly suggest that the trend has turned for now. - Note, unless and until it is broken, then the trend is higher still, and the current price action is a consolidation.

AUDUSD - the bounce.

Corrective bounce. Leads me to question this call for a large downmove similar to the EUR, as per the previous graph. ---

I am watching to see how this unfolds. - Would have expected a bounce after last weeks sell-off, to be a spike bounce,,,, i.e. sharp down, sharp bounce , then quick sell-off.... -- So far I know its only been a couple of days, so early yet, but lets see how this unfolds, but it does not appear to be a spike bounce, which is what concerns me ....

-- Obviously 1.0050 area will be resistance.... I think over there and we could be looking back to 1.0400 or even higher..  - will see how this unfolds over next couple of days.

AUDUSD possible overlay v EURUSD 2009-2010

Here is an interesting overlay of the AUDUSD over the past year+ versus the EURUSD in 2009/2011.

Overlays, always should be handled carefully, firstly because there is the possiblity that they are merely co-incidental, and secondly even where they do follow similar paths, the tmeptation to take them down to the micro-level, which nearly always ends in failure.

What is interesting about this overlay however, is how it accords with the '3 Peaks' pattern outlined in my previous post. - Note, the EURUSD was not part of a 3 peaks pattern, so I am purely focusing on the second half of the 3 peaks pattern here for the AUDUSD compared to a different bigger picture move for the EURUSD,

AUDUSD 3 Peaks pattern revisitied

Back in May I wrote a piece about a highly speculative view on the AUDUSD (Link to posting) about how the currency pair may be close to creating a rare '3 Peaks and Domed House' Pattern. - Since then the price action has gone a long way towards adding credibility to this view.

Before I continue, the technical analyst who first recognized this particular formation was a chap by the name of George Lindsey. Recently an excellent book has been published by Ed Carlson about the work of George Lindsey called 'George Lindsay and the Art of Technical Analysis'.

Back to the AUDUSD here is the original comparison of the AUDUSD and the overlay of the pattern.

And here is the updated version - Note I have added 2 options, as the 'double top' does not quite conform to the traditional pattern. - It is also possible, that the 'double top' could be indicative that applying the 3 peaks to the AUDUSD is incorrect, and that this could follow a very different path. - I am fine with that, markets prices action is never determined in advance, however I do feel it follows certain behaviours to various degrees of probability. - However, markets are chaotic systems, and though chaotic systems do follow patterns, they are incredibly hard to determine, and any number of variables can change the formation of the patterns.

The Bearish Triangle might be back on

Or - Should this be the base of this move. back at around the 1.4000 support?

Re: The Euro - Clearly the answer was no.

I will update in the next few days. But after some frustrating calls on the Euro recently...( See recent posts ) I sense this may have turned down properly...