I have been waiting for the TLT to break below the low from February 21st to possibly begin the completion of its current bigger time-frame price structure … today price broke below that $116.51 level and I think the next swing trade in bonds will be to the upside. Here is what I am seeing.
US Treasury 10 Yr. Bond Yields – Daily Chart
Ok … this is my big picture of the 10 Yr. Bond yield (yield is the opposite of price obviously). I think that the bottoming process of interest rates and yields will be a multi-year process, but I think that the 2016 low is likely the generational all-time low going forward. The move off of that low will not be straight higher however … it will consist of several head-fakes and multiple large waves. The first larger-sized wave to me looks like it will be an ABC structure, and that this price structure is likely very near its completion.
Why do I think this move off of the low is just an ABC and not a 3-wave structure?? Well the big thing for me is that the corrective wave off of the late-2016 high did not get all of the way down into the SLOT support zones. Because price only pulled back to the 38.2% Fibonacci support level, and because it looks like we have completed a 3-wave price structure higher out of that last support zone, I feel confident that traders should be looking for an ABC move here and therefore a termination zone for the current leg to end at around the 1.272x extension target.
C-waves are typically 3-wave structures, and therefore this move off of the 2016 lows has all of the components of what I think is an ABC. If I am right, then traders should be looking to put on a nice swing trade in bonds/TLT/futures in the near future. Where can we expect that to be? No sense guessing ahead of time here … all we know for sure is that we are near the end of this move higher in yields. Traders need to be looking at 30-min and 60-min charts to increase the odds of finding a good low-risk entry level for that next swing trade higher in bonds.
Here is a closer look at the C-wave …
US Treasury 10 Yr. Bond Yields – 195 Minute Chart #1
It looks like we are getting into a termination zone that should offer a low-risk swing entry. Here is an even closer look at that last 3rd wave of the bigger C-wave …
US Treasury 10 Yr. Bond Yields – 195 Minute Chart #2
The 3rd wave for the bigger C-wave does itself look like a 3-wave structure, and also right in a typical termination zone. ALL SIGNS LEAD ME TO BELIEVE THAT THE RISE IN 10-YR TREASURY YIELDS IS NEAR A TRADEABLE RESISTANCE LEVEL!!
US Treasury 20 Yr. Bond ETF (TLT) – 195 Minute Chart
As mentioned, the price for the TLT sounded off my audio alert, and is likely getting near a level that will be a great risk-reward long trade.
Cheers … Leaf_West