Nordea Sees Bund Yields Advancing to 1.76%: Technical Analysis

German 10-year bond yields may rise to an eight-month high of 1.76 percent after climbing above a key level of so-called resistance, Nordea Bank AB said, citing trading patterns.

The bund yield, which was at 1.61 percent at 12:14 p.m. in London, will rise further if it closes higher than 1.598 percent, a level that represents a 23.6 percent Fibonacci retracement going back 12 months, the bank said in an e-mailed note today.

“The short-term target is 1.76 percent,” wrote Nordea analysts including Jonas Thulin, the Stockholm-based head of alpha strategy. “These coming days are vital in setting the next move. A close above 1.598 percent, would clearly signal more upside.” The last time the yield reached 1.76 percent was on April 26.

The bank said near-term resistance, an area on a bond-price graph at which analysts would expect to find buy orders clustered, is seen at 1.608 percent. Investors should exit this trade if the yield falls to 1.508 percent, the bank said.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, currency or index.

Before it's here, it's on the Bloomberg Terminal.