Forex Flash: Head and shoulders pattern forms for Bunds – RBS

FXstreet.com (Barcelona) - The recent Bund price action formalized a head and shoulders pattern with initial targets of 144.24 and 143.54. We keep in mind there is also a very strong support at 144.00 – a level of polarity change and March gap. According to Technical Strategist Dmytro Bondar at RBS, “The sell-off brought significant damage to the charts, taking off the 145.46 support on close and moving the price beneath 20- day MA at a time, when the 20/5/5/3 a slow stochastic has formed a bearish divergence with the price action.”

Moreover, “Any bounces to the neckline region of 145.00 – 145.50 are likely to be sold, targeting 144.25/144.00 onto 143.56. A sustained recovery above 20- day MA (currently at 146.10) cancels the view.” Bondar adds.