EURGBP TECHS: Bear Threat Still Present

Local governments are expected to increase and accelerate the issuance of special bonds early this year to boost domestic demand, the Economic Information Daily reported. As of January 6, local governments have planned to issue a total CNY680 billion local government bonds in Q1, of which special bonds account for CNY240 billion, the newspaper said. Funding demand remains high as a large number of major infrastructure projects will be started this year and local authorities need to supplement their financial resources for swapping out off-balance-sheet debts and buying up unsold homes for affordable housing, the daily said citing analysts.

• RES 4: 107.365 High Dec 12
• RES 3: 107.170 High Dec 20  
• RES 2: 107.032 20-day EMA 
• RES 1: 106.785/965 High Jan 6 / 3     
• PRICE: 106.740 @ 06:11 GMT Jan 7   
• SUP 1: 106.685 Low Jan 6             
• SUP 2: 106.680 Low Nov 20 (cont)  
• SUP 3: 106.645 Low Nov 18 (cont)
• SUP 4: 106.625 2.00 proj of the Dec 2 - 6 - 12 price swing

The current bear cycle in Schatz futures remains intact and recent weakness, including yesterday’s fresh cycle low, reinforces this theme. The Jan 3 sell-off confirmed a resumption of the bear leg and sights are on 106.680, the Nov 20 ‘24 low (cont). Initial firm resistance is seen at 107.032, the 20-day EMA. A clear break of it would highlight a potential reversal. For now, short-term gains would be considered corrective.