If the triangle plays out and TLT swings lower, the red area is where I will be looking the first signs of support. We have 200 mA, a support line and a fib level in this area. A break above 141.72 would invalidate the triangle count.
Possible swing change here with Heiken bars changing color. However the break below the support and MA has me skeptical.
We've seen some strong, green Heiken Ashi bars upwards. The last few had no bottom shadows indicating a strong up trend. However, the bars are getting smaller as it tests the resistance line. And we're still hovering about a 200 mA with RSI on the overbought side. I'm not discounting a continuation of the down trend. But I did take a small, long TLT position this week - I'm not making a trade suggestion for anyone.
The break below the previous low discounts a 1st wave up, according to Elliott's rules. It will be interesting to see what happens next, but I am considering a double zig-zag correction or possibly a leading diagonal down. The later case suggests a reversal in trend. I am maintaining my long position for now and perhaps will get out on a bounce up. I am not making any trade recommendations.
I am going to start tracking the treasury futures instead of the TLT. The futures index offers higher exposure to the masses, which is what drives Elliott waves. Tracking Elliott waves on derivatives or individual stocks can be problematic; derivatives and stocks are both controlled by small groups of people which can skew the wave patterns. In the case above we have what appears to be a triangle in the 2nd corrective wave, which led me to believe it to be a "B" wave since triangles are not possible in wave "2" of an impulse. However, I do not see a triangle in the second wave of the TBond futures. In fact, I see 5 waves down approaching a weekly support line, which suggests the first step of a move downward on a larger degree. I am going to wait to see if we have a bounce up from there and liquidate my TLT position. As always, I am not making trade recommendations.
TLT broke out of its consolidation to the short side as expected, completing the triangle formation. The market has moved sharply into the first cluster of support. No evidence of support yet. Staying neutral for now.
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