The 20+ Yr Treasury Bond ETF (TLT) failed once more on the falling 40-week SMA and appears poised to renew its greater downtrend. Remember the fact that bonds and yields transfer in the wrong way. A resumption of the downtrend in TLT interprets right into a resumption of the uptrend within the 10-yr Treasury Yield.
The chart beneath reveals TLT hitting resistance-reversal zones twice: November 2021 and December 2023 (purple shading). A key tenet of technical evaluation is that damaged help turns into future resistance and these resistance ranges stem from damaged helps. Discover how TLT broke down in early 2021 after which returned to damaged help with the rising wedge (blue strains). See the tip of this text for particular provide from TrendInvestorPro.
One other key tenet of technical evaluation is that counter-trend advances retrace one to 2 thirds of the prior decline. In 2021, the counter-trend bounce retraced 50%. Consider this as two steps down and one step up. Downtrends prevail so long as the down legs are greater than the counter-trend bounces. The rising wedge was a counter-trend advance. TLT broke down in early 2022 and fell into October 2023.
After hitting a brand new low in October 2023, TLT surged together with shares in November and December. This surge additionally returned to damaged help and damaged help once more was resistance (purple shading). This advance additionally retraced round 61.8% of the prior decline. TLT is once more failing at resistance because it fell again beneath its falling 40-week SMA this week. The subsequent chart reveals the 10-yr Treasury Yield turning again up and crossing above its 40-week SMA. A continuation larger targets a transfer in the direction of 5.5%.
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Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic method of figuring out pattern, discovering indicators inside the pattern, and setting key value ranges has made him an esteemed market technician. Arthur has written articles for quite a few monetary publications together with Barrons and Shares & Commodities Journal. Along with his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Enterprise Faculty at Metropolis College in London.
