This week’s Chart of the Week features the ETF, TLT, which has been under pressure as treasury yields have been on a run. Fundamentally, strong upward momentum in equities and rising expectations for a March interest rate hike (currently above 70%) have really impacted treasury yields. The ten year note yield has risen 25 basis points since the New Year which is a relative large move. The bond markets are also very much driven by positioning and technicals which is why we look to the charts and technical analysis in this case. We recently saw TLT break below a triangle formation at $124.59 which led to severe downside pressure and this should continue down to support at $122. Upon reaching $122, we expect that level to break and a test of $120 would be the next level of support to watch. Additionally, the RSI is currently not signaling oversold conditions for TLT and the strong momentum to the downside should continue to follow through. We should see the yield on the ten year note rise to 2.74% in the near future, and yields all across the boards will follow. This will continue to cause a drop in TLT and the technical levels outlined are essential to watch.
Farewell and Trade Well,
Founder and Editor-in-Chief