Is a Bullish Reversal Brewing for Bond Fund TLT

Jul 6, 2015: 1:26 PM CST

With stocks testing support and threatening a possible breakdown (reversal), US Treasury prices (measured by popular bond fund TLT) are staging a possible reversal higher of its key support level.

Let’s pinpoint the level, highlight the positive divergences, and plan for a possible reversal up for bonds.

Here’s the Daily Chart with the Divergences at Support:

First and foremost, a reversal is not guaranteed – we’re just measuring indicators and probability.

Given the trend, we’re seeing a downswing into the $115 level (for TLT) and a small “Three Push” Pattern scraping against these lows.

We also see a “Triple Swing” Positive Momentum Divergence undercutting the sell-swing and forecasting a higher probability for a reversal up away from this support level.

For traders, a highly aggressive support-bounce buy signal has already triggered in late June and the second “prove it to me” buy signal would trigger here above $118.00 and $119.00 per share or even $120.00 which is the falling 50 day EMA.

An upside bullish (green) price pathway opens above current levels as highlighted.

For now, study the chart (and related charts) more carefully and follow price as it moves away from – or back toward – the Daily Pivot and Divergent Support near $115.00.

Note upside levels as targets in the event price does continue trading higher.

Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).


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