My buddy Francisco mentioned to me today that bonds look like they are ready to move higher … that immediately made sense to me as I knew that bonds had broken out of the downward broadening price pattern at the end of 2018, and from all that I have recently been watching, US equities have run out of juice in the bounce from the late December lows.
I’m not going to put on any swing trades here in bonds yet, but when the bond ETF (TLT) gets back above the 195-min 20-ema and the 20-ema’s signal line (i.e., price gets back into a bullish position), I will just watch it a bit closer and probably look to trade it long intra-day or for a max of 2 or 3-days at a time. Here are the charts …
20-Year Plus US Treasuries Bond ETF (TLT) – Weekly Chart
Like I mentioned above, the TLT price broke out of its downward broadening price pattern in late-2018. Will that be a fake break-out? Maybe, but I think the strength shown by the Relative Strength indicator tells us to expect further strength in TLT in the weeks ahead.
20-Year Plus US Treasuries Bond ETF (TLT) – Daily Chart
So the pullback here in early 2019 has all the looks of a ABC sideways consolidation … price poked below the A-pivot low and therefore it technically has created a complete ABC price pattern. Is price finished with the C-Wave?
20-Year Plus US Treasuries Bond ETF (TLT) – 65 Minute Chart
The 65-min chart is not the best one to rely on for assessing then end to a weekly price pattern … however, all reversals have to begin somewhere. Price broke above the 65-min ATR resistance level today, so traders looking for evidence of the near-term top in equities should take heed.
Again, I think there is a good chance that bonds do well going forward here for the next several months … I do not believe that a new all-time high in bonds is in the offing, but I think that we can at least get a second leg higher out of the broadening price pattern.
So thanks again, Francisco for the heads-up … let’s see if we can make some money in bonds here over the next little while.
Cheers … Leaf_West