GILT TECHS: (H5) Bull Cycle Remains In Play

• RES 4: 123.34 High Dec 11 and key resistance     
• RES 3: 122.85 High Dec 12  
• RES 2: 121.94 High Dec 13  
• RES 1: 120.45/120.51 High Jan 2 / 20-day EMA   
• PRICE: 119.08 @ Close Jan 7 
• SUP 1: 119.01 Low Jul 7        
• SUP 2: 118.80 76.4% retracement of the Nov 7 - Dec 11 bull cycle  
• SUP 3: 118.51 Low Nov 8
• SUP 4: 117.40 Low Nov 7 and a key support      

The current bear cycle in BTP futures remains in play and the latest fresh cycle low reinforces current conditions. The contract has recently breached the 20-day EMA and sights are on 118.80, a Fibonacci retracement point. Clearance of this level would strengthen the bearish theme. Key resistance and the bull trigger has been defined at 123.34, the Dec 11 high. Initial firm resistance is seen at 120.51, the 20-day EMA.

• The Riksbank had forecast CPIF at 1.9%Y/Y (consensus 1.7%Y/Y, actual 1.5%Y/Y). So 0.4ppt below the stale Riksbank forecast and 0.2ppt below consensus.
• For CPIF ex energy the Riksbank forecast was 2.2%Y/Y (consensus was also 2.2%Y/Y). That came in at 2.1%Y/Y so only 0.1ppt below both the Riksbank and consensus.
• So overall the downside miss wasn't huge. EURSEK remains below its overnight highs (Bbg data shows a high of 11.511 post-data) but we are broadly back in line with pre-data levels at 11.507 at the time of writing.
• There's very little details released with the flash, but at first glance this doesn't really impact the expectation of another 25bp cut by the Riksbank in Q1 with an uncertain monpol outlook thereafter.

• RES 4: 93.38 Low Dec 18  
• RES 3: 93.09 High Dec 20  
• RES 2: 92.88 20-day EMA 
• RES 1: 92.13/60 High Jan 7 / 3              
• PRICE: 91.40 @ Close Jan 7 
• SUP 1: 91.31 Low Jan 7                         
• SUP 2: 91.09 4.1.236 proj of the Dec 20 -27 - Jan 2 price swing  
• SUP 3: 91.00 Round number support 
• SUP 4:90.88 4.1.382 proj of the Dec 20 -27 - Jan 2 price swing

The trend condition in Gilt futures is unchanged, it remains bearish and yesterday’s fresh cycle low reinforces current conditions. The move lower has confirmed a resumption of the downtrend, maintaining the price sequence of lower lows and lower highs. Sights are on 91.09 next, a Fibonacci projection. Initial resistance is at 92.13, the Jan 7 high. Resistance at the 20-day EMA, is at 92.88, and the average is seen as an important hurdle for bulls.