The US Bond market has been in a bull market since the 1980s and although I originally was looking for a potential high early this year, we have not really progressed much further, expect that real rates have come down even lower and tested the prior December 2008 lows at 2.5%, potentially creating a double bottom.
No one knows for sure how low yields can go, but from a technical perspective, it sure looks a great setup for a reversal.
When you look closer there appears to be a wedge shape or what market technicians call a "bearish wedge". We see these patterns at the top and bottom of a trend as the momentum slows down and the trend is in a transition and reversing the direction.
Having hit and exceeded my target, I suspect Bonds could see a bit more upside towards 153.50-154 based on the continuous contract.
Based on my Elliott Wave count from the 1981 low, I suspect this is actually inside wave 5 and near a terminal phase of this bull market, although we still don't have any strong evidence to confirm the bull market is over, based on the wedge shape the odds still do look good for a reversal close by.
Close by in this market means weeks and months, as I think traders forget this is a 30 year span, not a 15 min chart, so a transition from topping to reversing lower is an ongoing event and will take months, but the fact that it clearly is showing a bearish looking wedge is a positive sign for the bears, but I think it will require a bit more patience for what arguably will be the "trade of the decade".
Have a profitable week ahead.
Click here to become a member
You can also follow us on twitter
What do we offer?
Short and long term analysis on US and European markets, various major FX pairs, commodities from Gold and silver to markets like natural gas.
Daily analysis on where I think the market is going with key support and resistance areas, we move and adjust as the market adjusts.
A chat room where members can discuss ideas with me or other members.
Members get to know who is moving the markets in the S&P pits*
*I have permission to post comments from the audio I hear from the S&P pits.
If you looking for quality analysis from someone that actually looks at multiple charts and works hard at providing members information to stay on the right side of the trends and making $$$, why not give the site a trial.
If any of the readers want to see this article in a PDF format.
Please send an e-mail to Enquires@wavepatterntraders.com
Please put in the header PDF, or make it known that you want to be added to the mailing list for any future articles.
Or if you have any questions about becoming a member, please use the email address above.
If you like what you see, or want to see more of my work, then please sign up for the 4 week trial.
This article is just a small portion of the markets I follow.
I cover many markets, from FX to US equities, right the way through to commodities.
If I have the data I am more than willing to offer requests to members.
Currently new members can sign up for a 4 week free trial to test drive the site, and see if my work can help in your trading and if it meets your requirements.
If you don't like what you see, then drop me an email within the 1st 4 weeks from when you join, and ask for a no questions refund.
You simply have nothing to lose.
By Jason Soni AKA Nouf
© 2012 Copyright Jason Soni AKA Nouf - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
© 2005-2013 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.