The recent big sell-off in gilts (115.56, March contract) further vindicates our scepticism of the last couple of months.
However, the long gilt future is now at an interesting juncture, being a combination of a Fibonacci time-cycle week, a horizontal support zone and the bottom of the weekly Ichimoku cloud. As such, we believe a near-term bounce could be on the cards, covering some 4 per cent from trough to peak, and perhaps lasting three to four weeks. We believe we will see new highs in gilts in 2010 once the next phase of the crisis takes hold. Until then, cautious trading is our strategy. If support gives way, we'd have to think again.
IC Trades are written by Investors Chronicle writers. City Trades are written by selected external contributors. Both are based on the interpretation of patterns on a share price chart, rather than on fundamental analysis of the company's business or prospects.
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