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We’ve heard a lot about the troubles in Europe over the past few weeks and this has brought trading opportunities in the European Currency (EC-Spotv in ProfitSource software) into sharp focus.
The conditions in Europe are also providing opportunities in the bond market. New traders often shy away from bond markets but trading Bonds is not so different from trading stocks or currencies.
This week I’d like to highlight a potential long-term move that might be underway in the Euro Bund market (FGBL-Spotv in ProfitSource software). Let’s take a look at this market in Chart 1 below:
Chart 1
click to enlarge
The Euro Bund has shown a strong uptrend for the last twenty years. Right now, however, it is showing signs of being close to, or at, a major top.
Students of W.D. Gann would be familiar with the Sections of the Market lessons from his book ‘How to Make Profits in Commodities.’
The Euro Bund in Chart 2 below indicates that this current bull market has unfolded in four large sections.
Chart 2
click to enlarge
Within the fourth section of the market, there are three smaller sections, all of equal size, as shown in Chart 3 below:
Chart 3
click to enlarge
The Euro Bund currently appears closer to a top than a bottom. When we turn our focus to the swing charts, we can see the weekly trend has recently turned down, as displayed in Chart 4 below:
Chart 4
click to enlarge
If the Euro Bund is at a major historical high, I don’t need to point out the opportunities that may be on offer in the coming weeks and months. Think about the major highs we have seen on global share markets in the past five years. The moves that follow these highs often last for years and provide massive opportunities for profits.
This could be the start of new bond market ‘golden age’ for traders – enjoy the ride!
Be Prepared!
Mathew Barnes
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