20 Year Treasury Bond ETF(TLT): Price direction estimates.My views what is happening in the bond market, what to look out for in the coming trading session
The 20 year Treasury Bond prices fell below the long-term price channel in the H4 price chart at around 147.40 support level on Feb 13, 2021, and recently bounced off 137.40 on Feb 26, 2021, indicated on the chart below, the same day we saw the sell-off and drop-in the stock market.
The closing price of the bond market Friday's session was just below 142.40, a critical level tested in the past and could be tested in future trades. The last H4 price candle closed in red, but relatively small compared to the previous H4 bull candle with a reasonable volume which indicates buyers are still holding on from the bounce we saw at 137.40 and 139.90.
I think 142.40 and 141.40 support lines are important if it's going to continue up. If it holds above 142.40, we could be looking at retesting the 144.90 resistance line at the bottom of the price channel and 146.40/147.40.
If it fails to get back above 142.40, 139.90 and 137.40 could be a potential support area.
TLT trade ideas
US Equity Market could bottom out soonTLT
From a post view to analyze the market these days, "everybody" knows from the media that the reason is "fear of hyperinflation"
But how much inflation is high enough and when does this correction ends?
jump into my conclusion : the correction is ending soon.
Why?
there are 5 reasons to look for :
1 correction was triggered by diving T-note, looking at TLT, since the broke out from a 2B at early Feb, it accelerated, but approaching pre-pandenmic level.
2 raw material price on the massive run since last year, Copper and Crude oil had their times, but is approaching previous resistance
3 looking at nasdaq, 2Hr and 4Hr had made new lows but with MACD divergence
4 catalyst could be the freezing weather that send crude to the sky and the priced in stim bill, with dead line approaching, there still a big uncertainty in this, so could triggers some risk aversion
5 Nasdaq is approaching 12/18 quad witching support
TLT should see some buying soonThe 20y bond sell off has dropped into support. We should see some buying here to bring yields back down. If the buying comes in the market should bounce. If however this 618 level does not hold and bonds continue to sell off things could get ugly. Important level to watch IMO.
Bond yields have lost critical supportYields spiked past their March 2020 highs overnight. (This chart is inverted). Many believe this will be a sign of hyperinflation. To me, it is a sign that the FED has been amputated of its second last magic power (ie. moving to negative rates) and therefore they are losing control of the financial markets. If they want to keep this shenanigan going, they likely have one final weapon in their arsenal which is to buy up stocks *directly*. Such a move would have huge socio-economic and political ramifications. So, will they do it? Or will they finally let mother nature take its course and restore balance to this mangled beast we still call a stock market?
With respect to the question of hyperinflation, I agree that it will hit hard, but *only* the essentials of life: core inflation. In general, we will remain in a deflationary environment until all the bandages unravel one day and the whole system resets to heal itself from the bones out.
Swing Treasuries Up? A Contrarian TradeI like the gap down and reversal in today's candle along with this happening at the 5% lower envelope like back in June 2020. Betting long term interest rates cool off a little here. It's a ballsy play from the prior downard movement but I like the risk to reward setup.
Bullish Garley PCZ At Support Above The 200 Week Moving AverageTLT has hit a significant support visible on both the weekly and the monthly at a 78.6% Fibonacci Retrace from the previous low to high. I will expect to see TLT attempt a Bullish Reversal from the horizontal support zone i have highlighted in green. If we get any significant movement below the 200 week moving average then i would exit the trade. As for profit taking levels, i would take some profit once we near the last high and hold the rest as i believe we could go much higher.
BEST INDICATOR FOR TLT: When to build positionsWe have here a chart of a TLT with a comparison line of the ZN1!/ZB1!. What I have found is that when the ZN1!/ZB1! ratio hits a resistance level, TLT is also nearing it's bottom. I encourage you to look at the ZN1!/ZB1! separately. Recently, TLT has reversed with strength to the upside once these resistance levels are in range.