Monday, April 19, 2010

Bonds - Trading In The Gap



Above is a daily chart of TLT (bonds) with the stochastic oscillator in the lower panel. You'll notice that the bonds are testing the gap that was made on March 24th when TLT gapped down from the previous day's low. Gaps sometimes act as powerful resistance and so far it appears that TLT is having trouble filling this gap.

The stochstic oscillator is also in the overbought zone which as you can see coincided with many previous highs. Such overbought stochastics readings are highlighted with blue arrows.

I'll be watching TLT for a possible short trade here. What I am looking for is for the stochastics to close back below the 80 level. Lets see what happens.

2 comments:

Anonymous said...

What do you think of Cad/jpy?
Seems good to me.

Don's "Trading-In-Action (TIA)" said...

TLT has broken long term support imo. This retracement presents the best r/r short entry with a stop loss above 92. Target? haha, i will let Kevin do the sharing session.

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