R153 – RE­VER­SAL PAT­TERN

Finweek English Edition - - Creating wealth -

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.

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