FGBL Dec17

In my opinion, the first thing, even if it’s not important for day trading, is to get an idea about the fundamentals and the economic outlook. Europe has been outperforming related to other economic areas. The beginning of the Eurozone recovery was driven by the exports, taking advantage of a cheap Euro. In addition, the industrial production and the consumer index show better figures. The BCE has been criticized because takes a lot of time to decide and implement changes in the economic policy. I like to say that Europe moves slowly but with certainty. Draghi has been hawkish supporting the improvements of the economy in the last meetings.  The next step, like in the US, is to stop buying government bonds and different assets to support the economy. It’s difficult to say when it will happen, I’d like to think about the final of the first quarter 2018. The weakest part is the inflation that is not as high as the BCE would like it.

    Source: TradingView, FESX EuroStoxx vs EURUSD

FGBL

    Source: TradingView, FGBL Euro-Bund Dec17

As you can see this contract didn´t have enough liquidity until September when the other contract expired. I’m going to analyze from September to October.

    Source: TradingView, FGBL Technical Analysis

As you can see there are 2 clear resistances (161.32 and 161.93) and two supports (160.85 and 160.57) I’m bearish on this contract. It’s trading in a congestion zone, so I expect a large movement as soon as it breaks the 161.93 resistance or the 160.57 support. I´ve highlighted in yellow some of the most significant shadows. The numbers, 1 to 3, shows the strength of the buyers in the area between 161 and 160.20. In the number 4, yesterday, the market rejected the prices and bounced back to the first resistance at 161.32. Today, it went up twice but the upside movements have been rejected and at the moment is around 161.30.

To sum up. I have a positive outlook of the Eurozone and technically I can see a bearish trend. The risks are: a turnaround of the world economy (considering the correlation in the markets), how the Brexit will affect the Eurozone, the independence movements of the countries in Europe. If you do day trading you shouldn't worry about these things but it's good to have in mind. 

Have a good trading.

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved