Bonds Test Key Support

The bond market (TLT) has been selling off for the past two weeks and is now testing key support. In the above daily chart of TLT you can see that we are now at the major uptrend line which began last April. This market is also at the highs from July which acted as resistance but should now act as support.

What I find interesting about today's price action is that the bond market put in a bullish engulfment pattern which is a reversal formation. What is significant about this bullish engulfment is that it formed right at key support which increases the odds that we may see a rally take place shortly.

If the bonds do rally, this may put pressure on stocks which are overbought at the moment and trading right at  resistance.. Anyway, for what it's worth, that's my thinking. Lets see what happens.