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US Treasury Bonds Corrective Rally Could Forecast

Interest-Rates / US Bonds Sep 18, 2013 - 09:52 AM GMT

By: Gregor_Horvat

Interest-Rates

I hate to say this again, but major pairs on the FX market place still have a very unclear price action and no direction at all on the intra-day basis. It’s probably “calm before the storm” ahead of highly anticipated FOMC press conference of the last few years, when Bernanke could announce tapering.  Statement will be out at 18:00GMT and press conference will be scheduled 30 minutes later. So until then we may not see a lot of price action today.


However, when any changes regarding the monetary policy will be announced then expect a huge impact on USD pairs, particularly USDJPY which has a strong relationship with US yields.  US bonds will move strongly today, and will be interesting to see in which direction they will go if they will start tapering. Keep in mind that markets usually reacts the opposite than you would normally expect. During the QE period, interestingly, bonds were falling/yields rising so if they will lower QE now then this could cause the opposite reaction; higher US bonds in this particular example. That is what we called “buy the rumor sell the news” scenario.

Somehow, I would not be surprised by higher US bonds and reason is the following count on 30year US bond daily chart where I see five waves down in wave III with ending diagonal at the bottom that is pointing for higher prices. A daily close above 132.20 wave 4) extreme would be a bullish signal. If this count would prove correct then US yields will fall which will cause a bearish trend on USDJPY!! For now nothing is confirmed, especially not ahead of FOMC when anything is possible. Bonds could also continue lower if monetary policy remains unchanged, that’s why we need a close above 132.20 to confirm any larger reversal.

30Year US Bonds daily

Written by www.ew-forecast.com | Try our 7 Days Free Trial Here

Ew-forecast.com is providing advanced technical analysis for the financial markets (Forex, Gold, Oil & S&P) with method called Elliott Wave Principle. We help traders who are interested in Elliott Wave theory to understand it correctly. We are doing our best to explain our view and bias as simple as possible with educational goal, because knowledge itself is power.

Gregor is based in Slovenia and has been in Forex market since 2003. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets; from candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful to traders.
He was working for Capital Forex Group and TheLFB.com. His featured articles have been published in: Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu. He mostly focuses on currencies, gold, oil, and some major US indices.

© 2013 Copyright Gregor Horvat - 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.


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