US Bonds at Crucial Pivot Point

US BONDS ARE EXTENDED IN TIME & PRICE

The US Bond market is an incredibly long-term and slow-moving market; at least when it comes to major shifts in interest rates.

All the angles have been played to keep interest rates down and, even so, there’s been a slow drift downwards indicating a slight bump upwards in interest rates.

It was just a matter of time before certain Time & Price scenarios came to pass lining us up to an important pivot area of price and time.

That time is between now and the end of this year as we’re at the end of the natural reaction periods on a 6-month basis, but, also for the 1-year trend as well. As we examine the chart below, we see that we’re right on one of the trigger areas (shown with the red horizontal bar below the present market price.

US Bond and interest rate trends

Price charts courtesy of Finviz.com. Indicators by Money-tigers.com
CLICK CHART TO ENLARGE FOR VIEWING

This same scenario is being played out in the Time dimension as well and seeing the convergence of both 6-month reactions and the one-year reactions gives all the more importance to this particular time for US BONDS.

A rebound upwards towards lower interest rates would almost require that those rates go to even lower levels than previously record low levels.

However, a further breakdown in prices from here would take us into familiar territory which we’ve visited only a few years back. The potential of revisiting the ‘familiar’ is actually another reason to place more weight on the downside potential. An Excalibur Line applied to the daily level will help reveal the market’s choice earlier than this longer-term chart alone.

WD Gann recommended using 3 types of chart time periods for most markets: Daily, Weekly and Monthly. By using the monthly and weekly charts, one could maintain better perspective and stay with the major trend. One could then focus in at critical turn moments to catch shifts in trend using the shorter time-period daily charts. – George