Bonds On An Island

If bonds (TLT) finishes the day essentially where it started, it will have printed an island bar on the weekly chart.

Bonds (TLT) are currently trading in the pre-market around 144.15 – 144.65.

If trading stays in that tight range, with the technical conditions shown below, TLT may set up for a Monday gap-up reversal.

The potential island gap is shown on the weekly chart:

The part that’s not so noticeable on the bar chart (above) is better displayed on the weekly close chart:

TLT is right at established support.

To borrow Steven Van Metre’s assessment, with all the selling and the extremes in short positions taking place over the past six months, bonds have only been able to retrace to well known support levels.

Trigger events have a nasty habit of happening over the weekends.

That’s when the largest number of participants can be trapped with no escape. It’s how the game is played.

The island-gap weekly bar may not happen. Bonds could reverse (or collapse) during the up-coming session.

However, successful participation in the markets requires awareness of what could, or what’s likely to happen … before it does.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.
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