FuturesTechs Blog

The kids have just finished school for the year and we’ve had their reports. I’m pleased to say all the little Lamberts have been working hard and doing well (mostly!!). But how have we done here at FuturesTechs Mews in 2011?

We took a look back at our reports for the Bund Futures over the year to see. You can click on the chart below to make it bigger.

Our trend following approach meant we “caught” the moves higher in April to June and July to September. Our reliance on candlesticks saw us call several of the turning points in the ranging markets seen in Q3.

A - 12th January - turned bearish on trend break (125.44)

B - 16th Feb – Bullish on break of 123.12.

C – 24th March – “We didn’t manage to retake 122.55 yesterday, although we did fail bang on this level (the high was 122.56), so despite posting a green candle the bears are still in the box seat”.

D -13th April – “So we have a trend break and a powerful reversal pattern, and this combination cannot be ignored” – Turned bullish

E – 29th June - Bull stance adopted since April is abandoned.

F - 7th July – “..we posted a decent sized green candle, reasserting the bull trend, and suggesting (as we head into today’ ECB decision) that we can head back to the recent high at 127.57, with interim resistance at 127.03-04”.

G – 27th July - Back to bullish!

H – 25th August - Hit the sidelines once more

I – 26th September – “…this left us with a powerful “Outside Day” in western terms, and a “Bearish Engulfing Pattern” in candlestick analysis. We are now very close to channel support at 137.25 and gap support at 136.83, and if these two give way we will have to rethink”.

J – 5th October – “In candlestick terms yesterday was a Shooting Star, a powerful reversal pattern…”

K - 18th October – “We are testing the bears’ resolve after a really strong session yesterday that has left us with a Bullish Engulfing Pattern and a Bullish Outside Day, all rolled into one…This strongly suggests that the retracement is over”

L - 31st October –”…this looks like a dip to buy”

M – 1st December – “…we posted a third small bodied candle in a row, suggesting that the bulls might well defend this key support zone, and we will retake the broken trendline, and get back to bullish”

We are pleased to announce that our ipad/iphone App is now available to download from the App Store (simply search for “Futurestechs”).

We would like to invite you (client or otherwise) to download the App.

We are running a 2 week Free Trial Period when you can look at all the reports (After that access will be limited to 1 “sample” report per day).

We would ask that you pass this e-mail on to any friends or colleagues who you think may be interested.

Also any reviews of the App would be most helpful and appreciated, so if you like it please take the time to add a review to the App store.

As you can see from the screen grabs below (click on them for a full size view) the reports look really good on the ipad and, thanks to our friends at wordflow, navigating around the App and finding the reports you want is really easy.

Anyone who decides to subscribe will also be given free access to our Website Member’s Area (in case the kids are hogging the ipad!!) where all the reports are also posted daily.

Cheers,

Clive.

When I first started FuturesTechs in 2000 the Bund was the main contract that our clients were watching. I still think of it as our “Flagship” report to this day (even though we probably have more readers for our commodity and Equity Reports!) , and we won the Technical Analyst Magazine Award for Fixed Income in 2010 (reaching the final shortlist again this year), so our peers think so too.

Bunds have been travelling higher steadily since bottoming out in mid April. We have managed to ride this trend most of the way, and have seen a number of positive developments in recent sessions, not least yesterday’s break of 123.84-95.

Here’s what we said this morning, on our report that is always on Traders desks by 6.30am:

Another day, another green candle, another day where worrying resistance was seen off, in this instance 123.84-95.

The resulting green candle has Marabuzo support at 123.94, close to the broken resistance, so this becomes a strong support today and a potential buying opportunity on any dips.

125.02-10 is our next target “zone”; a 50% retrace level and resistance from early January.

As well as a short comment (we don’t believe that Analysis has to go on and on if it can be summarised in a few lines!) we also post a number of support and resistance levels in an easy to read format, with important levels highlighted in bold type. Alongside this we have our unique “SkewBar”, giving an indication of short term trend and the prices at which this is changing.

If you are trading or Broking Bund Futures this could be an invaluable tool. Click here to request a Free Trial.

After a strong session on Thursday that saw us back into positive territory we had a weak day on Friday, but we held above the 130.67 level that has now become our reference point to stay with the bulls.

So this looks like a buying opportunity in a market that is embarking on a resumption of an uptrend, a market that has just seen a pullback within the uptrend, and a market that should now be thinking about retesting the highs at 133.26.

If 130.65 fails to hold the bulls have one more opportunity to salvage things, a gap at 130.25.

Below are the short term support and resistance levels, the important ones highlighted in bold type.

As well as the Bund we also cover the Bobl, Schatz, Euribor, Short Sterling, US 10 Year Notes and 3 month Eurodollars, offering a comprehensive coverage for Futures days traders. Please ask us for a free trial to see if we can complement your current daily routine.

I think i did a reasonable job of explaining it on CNBC this morning (you tell me!!) so instead of babbling on too much here I’ll post the link:

http://www.cnbc.com/id/15840232?video=820121614

To summarise I said that 850 is a MASSIVE support level, and that the weakness to here is a buying opportunity, although if 850 breaks you don’t want to be long, and a “stop and reverse” (see below) strategy might be advisable.

We get “proper” confirmation of a bounce happening if resistance levels like 872.6 and 900 are retaken.

In Brent Crude Oil I mooted the idea that we might be due a bounce some time soon as we’re getting close to some important supports.

And in the Bund Futures I talked about a Double Bottom formation which gave us a buy signal last week.

I steered clear of talking about Equity markets because the short term outlook is a tad confusing, and we haven’t had the best of time calling these of late, if the truth be known.

“Stop and Reverse” is where you have a position and you get out of it with a stop order, but at the same time you do the same trade to create an opposite position.

For example say you were long five lots of Gold at 870 with a stop order at 845, that means you want to get out and take the loss on your trade if the market goes down as far as 845. A stop order is defined as a market order that’s triggered if your loss reaches a certain level or price. You should always have a stop order on any trade that you put on, and technical levels can be the best way of deciding where to place these orders.

Many people place their stop orders below important support levels (like 850 in Gold) and sometimes, if you think the move below this key level is going to trigger a wave of selling, you may want to initiate a short position at the same time. If you put in an order to sell 10 lots at 845, to continue using our example, you would take the loss on your 5 lot long, then create a 5 lot short position at 845. If the market then went to 775, as we expect, you will offset the 25 point loss on the original buy order with a 70 point gain on the short trade.

Have a good week.

Cheers,

Clive.

I, like many technical analysts, place quite a heavy reliance on Fibonacci levels, especially for “bigger picture” calls and direction.

So what’s it all about? FuturesTechs members have a couple of articles I wrote a few years back that they can access in our Members’ area that explain things (I hope) quite well.

Take a look at the number sequence below:

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.

The eagle eyed amongst you would have spotted how this sequence (called the Golden Sequence) comes about:

1+1 = 2

1+2 = 3

2+3 = 5

3+5 = 8

etc etc

Now divide the numbers in the sequence by the number preceding it. You will find that it comes out at a constant 1.618. This is known in mathematics as “Phi” (with a big “P”).

Now divide 1 by 1.618. What do you get ? 0.618.

Some pretty amazing symmetry, eh?! This number is called “phi” (with a small “p”).

Now look at your body. You have 5 fingers with 3 bendy bits on the end of your arms, that also have three bendy bits, that are stuck to your body that has 5 things sticking out of it (arms, legs and head just in case!!). All numbers in the Golden Sequence. There are plenty of occurrences in Nature as well (see the aforementioned articles in our Members area for more).

The most common usage of Fibonacci numbers in the financial markets is when things are retracing a big move, and this is what I thought I’d talk about today, because we’ve just busted through one such level in the Bund Futures.

You see between March 17th and June 19th this year (2008 in case you are reading this in years to come!) the Bund has sold off from 118.51 to 109.65 (using the adjusted continuation charts that we favour for Bond contracts). The market then started to rally, and once this got going we started to target 113.03, because at this level the market would have taken back 38.2% (100-61.8, in case you’re wondering!) of the weakness. This is the first big Fibonacci retracement line. On July 15th we got to a high of 112.88, so just 15 ticks away from our Fibonacci level, and the market promptly fell over. We posted a Shooting Star on that day , a strong reversal pattern in Candlestick analysis (highlighted on the chart below, which you can click on to enlarge). We sold off after this and within a week or so we were back testing the lows from mid June.

The rally that we’ve seen since July 23rd has seen us back testing this key 113.03 level once more, and today we’ve broken above here, on Trichet, and we’ve posted a strong reaction higher to boot.

The way we work here is to look for the 50% and 61.8% retracements as the next targets above once the 38.2% retrace is out of the way, so in the Bund our targets are now 114.08 then 115.13.

Finally I’ve been on the box again, so if you fancy listening to me blabbing on about Brent Crude and the Bund Futures then Click here.

The brave new world for FuturesTechs is welcoming new traders into the fold. Whereas we’ve traditionally catered for Professional Traders and Brokers, with our new “per end user” website we can now be accessed by a wider audience.

But a question we’re being asked quite a lot by new subscribers is “What is the Bund?”, amongst other things! (Bobl, Schatz, Euribor, Short Sterling, GasOil, to name but a few!).

We have been writing Technical Analysis in the Bund Future right from the start. It is one of our original reports from 2000 when we first set up. It has an interesting history actually, because Bunds were traded on the LIFFE Floor until about 1999, at which point they suddenly migrated to the DTB, now called Eurex, which was one of the early pioneers of Electronic Trading. As it was one of the biggest Futures contracts in the world at that time (and still is today) this was quite a coup, and can be classed as the death knell for Floor traded Futures, not just in London, but around the world.

As I said above the Bund Future is one of the biggest contracts in the world, regularly trading over 1 million lots per day. It is the benchmark for 10 year Bonds in Germany. Even though Europe “became one” in 2002 the financial markets, still to this day, reference the Bund for transactions in the European money markets.

The 5 year Bond Futures is the Bobl, and the Schatz tracks the 2 year part of the curve. All three trade very good Volume each day and are excellent contracts to look at if you are accessing the market directly. By definition the shorter dated contracts have less volatility.

When choosing a contract to trade (direct to the market as opposed to Spread Betting) Volume and Volatility are the two things you need to look for. Volatility is specific to your needs: For some people the DAX Future is a rampant animal that they would never dream of trying to tame. To others it’s a perfect challenge and the Volatility is welcomed.

But Volume is important because you need to be able to get out of a trade if it’s going against you, and if you trade something that’s very thin you may have trouble doing this.

So to new visitors of our Members area I urge you to have a look at these products and discover if there’s something there that suits you.

Most spread betting firms have quotes for these contracts, and the spreads will likely be reasonably close, because one of the things the Spread betters base the size of their spread upon is their ability to “trade the other side” if they want to.