Something you don't want to be long!I gave you a warning from a Monthly bird view last week...
It' rolling over. I am building shorts in fixed income markets.
ZF1! trade ideas
Another reason, why you can't be bullish on US fixed incomeWhen you can't see clearly and you are undecided, make one step back.
As I found weekly and daily charts conflicting and unclear, I decided to pull out US 5y T-Note futures Monthly chart.
- Ichimoku is confirmed bearish! Tenkan Sen (9 months avg) and Senkou lines (forward Kumo components) all point lower.
- Heikin-Ashi pattern -> consolidation
- MACD and EWO are bearish
- Pattern: bear flag. If broken, then measured target will be 112'00 !
Very simple: lower key zone is 118'00 - 118'10 , in line with daily supports. Once it breaks, you can go massive short!
$ZF is not so bearish any more- Ichimoku setup is back to neutral. Average lines are flat. Weak bullish Tenkan/Kijun cross below price
- Heikin-Ashi is swing bullish
- EWO is back above zero (green territory)
5y Note market is not trending, it's neutral and sideaway at best. Maybe setup for range trading.
Heikin-Ashi warning! Sellers may take controlWeekly:
- Bearish Ichimoku
- Heikin-Ashi shows consolidation
- EWO is bearish
- MACD -> bearish consolidation
Daily:
- Ichimoku setup may deteriorate from bullish to neutral as Price fails to move back above Tenkan Sen and tests Kijun Sen
- We had 3 doji Heikin-Ashi candles in a row: indecision. haDelta+ and haOscillator may send an early bearish warning: cross down below center lines
- EWO is bullish, but momentum is softer
- MACD -> bullish consolidation
Supports to watch: 118'06 / 117'23 / 117'15
$ZF supports and resistancesWeekly:
- Bearish Ichimoku setup softens a bit as Price retraces to first bearish support: Kijun Sen at 119'02. Next hard resistance is above around 119'21.
- Heikin-Ashi is bullish, but haOscillator reached its extreme high at 100! The pull back will likely lose momentum.
- EWO is bearish, but closer to zero neutral level.
- MACD shows bearish consolidation
- Lower supp/res line is marked by Tenkan Sen slightly below 118
Daily:
- Bullish Ichimoku setup
- Heikin-Ashi shows some softer momentum. Temporary top is possible, but this is still far from a short signal as Kijun is well below Price, providing healthy support around 117'23.
- EWO and MACD are bullish.
Since the weekly is the leading major time frame, I would defenately not buy it not. If it gets lifted agressively from here, then I'd be cautious seller in smaller clips above 119'05. Otherwise rather buy dips at daily supports.
Real sell signal would come only with a daily bearish Ichimoku reversal, but that seems to be far away. Most likely 5y Note will be trading in 118 - 119'15 range with upticks in coming weeks. It may take 2-3 more weeks before we see more confirming signals of consolidation on weekly, and a high probability local top.
Pricing risk off?- Kijun Sen support at 117'15 held for last 4 days. Early bullish Kumo twist ahead: Senkou A is above Senkou B -> positive
- Obvious Heikin-Ashi buy signal, with haDelta+ confirmation (bullish cross above zero center line)
- EWO has been green for a while.
- In case of a succesful bullish Kumo breakout, the measaured target from a double bottom pattern would be somewhere in the 119'30 - 120'20 zone
I doubt this price action is due to a "dovish FED" pricing, or general return of bond bull market. What I think is that as usual, bond market is the first and smartest to price change in general risk sentiment.
Thoughts on 5y Note- The move is similar to 10 year, but due to curve steepening 5 year Note suffered a bit less.
- The big trend and Ichimoku setup is absolutely bearish, BUT:
- Price has dropped far far below equilibrium of appr. 120, marked by Senkou B and Kijun.
- Price reached a huge major support/resistance line yesterday, which has stopped bears two times precisely in last two years. I think it will break down eventually... just not now.
- Market is extremely oversold short term. It was a real blood bath in US bonds since Trump got elected. Oversold conditions are reflected in MACD and EWO extreme low prints.
- haDelta and DM_Oscillator corrected higher, but still below zero.
- MACD histogram has been ticking higher: market should pull back at some point.
If there is a level to take some profit on shorts, probably this is.
As wise gentlemen @Charityhedge mentioned too, it is a very good risk/reward level to even try a small bottom fishing, with stop below 118 on close, initial tgt to 119.
However, the main focus will remain to catch the trend on spikes to bearish supports.
Please also take note of the extremely elevated bond market volatility: ATR is just over the roof. Be smart, do position sizing with respect to volatility. If you don't understand what it means, stop trading immediately, just go read and learn everything about risk management.
***Long Opp***1) Long term trend is up given by the 89 day sma over the 89 day week sma.
2) Recent price action has created a great opportunity to trade with the trend!
3) Spike in volume!
4) Fractal Momentum has reached a maximum negative.
5) Fractal acceleration has turned positive.
One could buy the futures contract or sell a put option.
Futures trading involves risk of loss and is not suitable for every investor.
Long Opp HappeningLong term trend up indicated by the 89 day simple moving average over the 89 week moving average.
Short term price action creating a great trading opportunity to go with the trend.
Fractal momentum is reaching a maximum to the negative.
Fractal acceleration is about to turn positive.
We are waiting and watching for entry signal.
5Y Note waiting for Yellen at daily trend supportWeekly:
- Ichimoku setup still has bullish bias
- Pull back within a wide range. Price at Kijun Sen support.
- No trend, but maybe a huge rounded base has been built in last 3 years.
Daily:
- Ichimoku setup is neutral: price back to Kumo, below Tenkan and Kijun, Tenkan is still above Kijun though!
A break above Tenkan would accelerate buying again.
- Heikin-Ashi has been counter bearish, but started to signal some momentum loss at Kumo and trendline support
- EWO negative, but still close to neutral zero level.
0,5 Unit buy here. If Yellen goes dovish/less hawkish, Price can shoot higher again. You can also use a tight stop loss below Kumo and trendline.
Why to buy 5y instead of 10y?
My argument is still the same: I think markets started to price a reflation/stagflation story, where long end bonds will stay under selling pressure as inflation expectations increase, while front end and mid curve bonds will outperform, as central banks in general, and the FED too will stay well behind the curve. They will refrain from hiking too much, or too early, not to kill the fragile (or non existing) growth. It means yield curve steepening. So whenever I think about buying bonds, I rather buy mid curve, when I sell, I short long end.
US 5Y T-Note - Buy it againWeekly:
- 2-3 weeks ago there was an attempt for a bullish weekly Kumo breakout. However for a valid Kumo break Price always needs to close above previous key supp/res, which in this case failed at 121 last week.
- Last week's candle was a long wicked doji, this week we saw further selling pressure and Price dipped back into the Kumo. Chikou Span is down to Price candles again.
- Price is at Kijun Sen within the Kumo and also at the level of Senkou B. This means currently it is trading at long term equilibrium.
The picture is neutral on the weekly chart.
Daily:
- We have a wide bullish channel with lower support ard 119,15
- From almost channel top we saw red HA candles in a row, with first indication yesterday that the pull back within the trend channel may soon be over. The selling pressure may end around horizontal key support and Senkou B level (future Kumo bottom)
- Today's candle has a small green body woth both upper and lower wicks, haDelta is further up above SMA3, both lines trying to get back above zero level.
As you see, both on weekly and daily time frames this should be a relatively good support, so probably with HA buy signal the risk reward for long a long trade again is quite good.
US 5Y T-Note pull back or consolidation is possibleDaily (regular candlesticks): The main picture is bullish, but we looks like a Dark Cloud cover, which actually happened close to the bullish channel top. Slow Stoch is about to give a sell signal too.
Let's see how it looks with modified candles:
Daily (Heiken Ashi candles): On the day of the possible Dark Cloud Cover pattern the Heiken Ashi candle was still green, with no lower wick, so showed bullish bias. However haDelta aready crossed below its SMA3 line. How does it look like now? The recent candle is a doji, and haDelta is deeper below its SMA3 line. There is also a minor short term negative divergence in haDelta. This most likely indicates a consolidation or a pull back in the trend. The pull back target can be either the Kijun Sen, or maybe deeper to the Kumo. In case you open a swing short, you need to place stop loss slightly above recent top (121,50), and tgt between 119,50-119,80.
