Wednesday October 13, 2010 - 18:33:24 GMT
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December Treasuries under Pressure amid Increased Appetite for Risk
December Treasury Bonds are trading lower
as appetite for risk has sent investors away from so-called safer assets and
back into the higher yielding stock indices and gold.
The current daily chart pattern appears to
be forming a double-top against 135β19 and 135β12. Classic pattern watchers
should note that the double-top formation will not be confirmed until 129β05 is
Based on the short-term range of 129β05 to
135β12, short-term traders should begin to watch for a possible test of a
retracement of this range at 132β09 to 131β17. An uptrending Gann angle at
132β07 could provide additional support. Watch for a technical bounce to the
upside if the support cluster at 132β09 to 132β07 is tested today.
A breakout to the upside in the U.S.
stock market, a new record high in Gold and firmer crude oil prices are helping
to push the Canadian Dollar toward parity with the U.S. Dollar.
At the mid-session, the December Canadian
Dollar is trading at its highest level since late April and rapidly nearing
parity as well as the April 21 top at 1.0044.
Trading activity this year near parity has
produced top, but these bottoms have been a combination of overbought
conditions, changes in the Canadian economy and stern warnings from the Bank of
Canada regarding excessive speculation.
Although conditions may reach overbought
levels on the daily charts, this market is rising based on sound economic
reasons so I donβt expect the BoC to make any comments regarding excessive
speculation. This will allow the Loonie to continue to work higher over the
Once it gets through parity, there is also
the chance of an acceleration to the upside especially if this move is
triggered by a surprise event and panic buying ensues. The last time we saw
that type of action was during the initial stages of the 2007 financial crisis
when heavy buying pressure sent the Canadian Dollar to 1.0999.
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