BTP TECHS: (M5) Bear Threat Remains Present

• It is another relatively busy overnight session for Bund, with elevated volumes in {us} US Tnotes and the German contract going into the European session.
• Risk remains tilted to the upside for the German Bond on growth concerns in Europe, as well as Technically.
• Bund is now eyeing 133.58, Monday's quick/ fast market high printed on Monday, but better will now be seen at 2.30% in Yield terms.
• The German 10yr Yield printed at 133.86 high, with a 2.309% low on the 2nd January.
• Today sees Services PMIs, but final readings for the major developed countries, so should be taking a back seat.
• Focus will be on the US ISM services, while US ADP is also due.
• US Quarterly refunding will garner interest as well.
• SUPPLY: Gilt 2053 £2bn (Equates to 19.8k Gilt) could somewhat weigh into the bidding deadline.
• SPEAKERS: Fed Barkin (x2), Goolsbee, Bowman, ECB Lane.

Moody’s affirmed the European Financial Stability Facility (EFSF) at Aaa; Outlook stable in an ad-hoc ratings announcement after the close on Tuesday.

• Full release here.

• RES 4: 122.85 High Dec 12      
• RES 3: 121.88 76.4% retracement of the Dec 11 - Jan 13 bear leg   
• RES 2: 120.98 61.8% retracement of the Dec 11 - Jan 13 bear leg   
• RES 1: 120.45 HIgh Jan 5     
• PRICE: 120.26 @ Close Feb 3 
• SUP 1: 119.38 20-day EMA          
• SUP 2: 118.65/117.16 Low Jan 24 / 13 and the bear trigger
• SUP 3: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
• SUP 4: 116.07 Low Jul 8 ‘24 (cont)    

A corrective phase in BTP futures remains intact.The latest move higher has resulted in a breach of both the 20- and 50- day EMAs. This signals scope for an extension of the bull cycle and sights are on 120.98, a Fibonacci retracement. On the downside, initial key support to watch lies at 118.65, the Jan 24 low. Clearance of this price point would highlight a reversal and the end of the correction.