As April 2013 began, we saw positive reversals and breakthroughs in “Risk-off” US Treasury funds TLT and IEF.Let’s update these charts and note key levels and factors to watch for the rest of the month. TLT is the iShares 20+ year bond fund that is tradable as an ETF. We see the critical support inflection level at $115 and the reversal up off this key level from the with the March 2013 low. From there, price broke the 20 and 50 day EMAs (not shown) and then broke above both February swing highs $120 along with the 38.2% Fibonacci Retracement as drawn. This gives the chart a positive and confirmed short-term reversal to the upside, and makes the current focal point on the $121.50 then $120 level. I drew a Fibonacci Grid to highlight the recent peak high into the 61.8% level ($125.50) and we note the logical retracement lower against the strong upward rally from March. For future planning purposes, we’ll be looking for a retracement to target a lower support level such back to $120. A movement or break under $119 calls the reversal into doubt and suggests that the downtrend will continue perhaps even to retest or later break under the key $115 established low. For future upside levels to watch, a breakthrough above $123.50 targets the prior swing highs as highlighted near $127. While it would be on a powerful reversal swing suited for future planning, a breakthrough above $127 opens a profitable pathway toward the $132 peak.As you would expect, the structure is similar but the levels are different in the 7-10 year IEF Fund: While the more popular TLT fund rests in the lower region of its wider range or ‘downtrend’ pattern, the 7 to 10 year Treasury Note fund actually trades into the high of its broader range pattern as seen above. In fact, the focal point is the $109 level from which the fund recently reversed shy of this target. The blue larger Fibonacci Grid identifies $105.85 (the 2013 lows) and $106.80 (a horizontal polarity level) as the two support levels to watch. Right now, keep focused on the dynamics into the current $108.30 polarity level and then the $107.20 level – a breakdown lower here targets the blue horizontal line on a steep pullback. Otherwise, the IEF fund has moved back into the highlighted ‘neutral’ or range zone as defined by the majority of the price action from July 2012 to present (contained within the green Fibonacci grid). Continue using these simple price (Trendline and Fibonacci) reference levels in your own indicator analysis and trade planning. Follow along with daily commentary and detailed analysis each evening by joining our membership services for daily or weekly commentary, education, and analysis.
updated Apr 09, 2013
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