Market News & Analysis


Top Story

U.S Treasury bonds may see further downside pressure

 Medium-term technical outlook on U.S. Treasury Bonds ETF (TLT)



click to enlarge charts

Key Levels (1 to 3 weeks)

Pivot (key resistance): 148.90

Supports: 136.54, 128.45 & 122.30

Next resistance: 158.80

Directional Bias (1 to 3 weeks)

Bearish bias for TLT below 148.90 pivotal resistance and a break below 136.54 is likely to trigger a potential multi-week corrective down move to target the next supports at 128.45 and 122.60 (the lower boundary of a major ascending channel from Feb 2011 low).

On the other hand, a clearance with a daily close above 148.90 see an extension of the up move towards 158.90 next (Fibonacci expansion cluster).

Key elements

  • The U.S. Treasury 10-year yield has started to show signs of resilient after its 11-month of downtrend from Oct 2018 high of 3.24% has managed to stall at a major support at the 1.40% level that has prevented further decline since Jul 2012.
  • The recent rebound from Sep 2019 low of 1.43% has broken above a descending trendline from Oct 2018 swing high with the weekly RSI oscillator that has exited from its oversold region. These observations suggest a potential mean reversion rebound towards 2.60%-2.80% zone within a long-term secular descending channel in place since Oct 1987.
  • The movement of the Treasury yield has an inverse relationship with the prices of Treasury bonds; if yield goes up it will cause the bond prices to fall and vice versa.
  • The 136.54 downside trigger for the U.S. Treasury Bond ETF (TLT) is defined by the ascending support from 02 Nov 2018 low and the Sep 2019 swing low. Interestingly, the weekly RSI oscillator has shaped a bearish breakdown from its corresponding ascending support after it hit an extreme overbought level of 83. These observations suggest a bearish presignal on the price action of TLT which increases the odds of a breakdown below 136.54.

Charts are from eSignal 


From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.