R153 – REVERSAL PATTERN
Trend: Medium term sideways. Short term sideways to down. Strategy: Sell short the R153 on a close beyond line 1. • The R153 government bond is forming a potential inverse head and shoulders ( as labelled). The price at the time of writing has just closed beyond line 1 ( the “ neckline”) to confirm the pattern. • The downside target from a prior pattern ( July- Oct) has been reached, which makes the chances of a breakout and move above line 1 more likely ( in bond yields). • The daily stochastic oscillator ( on top) is neutral for the bond yield, but showing signs of turning up. Therefore, sell short the bond ( go long the bond yield). Look for a move on the yield to 8,555 ( minimum target). Close bond shorts there. Place your initial stop- loss as a close below 8,095 on the yield. Move this level to 8,230 once the price reaches 8,300. Note that a short- term fall in bond prices ( rally in yields) will put the stock market under pressure.