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Bond of the Week: 26 July 2013

HSBC 2.875% 2015 approaching par.


Since the last part of June, the HSBC Bank 30 April 2015 Corporate Bond has been clawing back some of the steep losses from the March-May top formation.  That accelerated sell-off, from around 102, had taken the RSI momentum indicator to extremely oversold levels, so a recovery attempt was to be expected.

What next?  From a charting point of view, the short-term rally has reached an interesting point.  One which could cause a pullback.  Firstly, the RSI is now indicating a very overbought condition.  Secondly, valuations have attained the round 100 figure, which is also near a prior area of support that has the potential to transform into a barrier.  Thirdly, the 50-day moving average is close by and may also exert downward pressure. 

Therefore, it would not be surprising if a reaction were witnessed shortly.


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