Treasury Bond Bears Still Hold Advantage (Elliott Wave Forecast)

Treasury bonds are back in the financial news flow and its time to provide an Elliott wave update on our outlook for T-bills. Last September, we shared our forecast for bonds and it has held up very well (as did the forecast before that one).

Today, we revisit treasuries via the iShares 20+ Year Treasury Bond ETF (TLT). We expect price to continue downward over the coming weeks/months before a trading bottom.

Our previous post was written just as TLT was retesting a resistance area at the brief high candle a few weeks after wave (A) of ‘iv’ on the chart. After a moderate pullback, price went on to test our next higher resistance area at 154.35 where it was rejected.

We suggested that a weekly close beneath 146.35 would represent confirmation of the bearish scenario, and we see that price accelerated when that support first broke.

Sign up for our FREE newsletter
and receive our best trading ideas and research

tlt treasury bond etf elliott wave forecast lower lows chart - april year 2022

Looking forward, we expect an impulsive (5-wave) pattern down from the peak of wave ‘iv’. We have drawn one possible way price could wind through the nearby support/resistance levels at 133.24, 127.29, 119.72 and 110.09, calculated using a Fibonacci-based technique.

A downward impulse would comprise the first wave of some larger pattern, which might end up being labeled as (i) or (a).

It also makes sense to consider the two dominant price/time cycles of 75 weeks and 33 weeks as you try to predict where the current decline will stop. Keep in mind that sometimes the inflection of the cycle is more important than whether it’s happening at a cycle high or low.

Because the easiest part of the trade is probably over, bond traders should make sure their style is well suited to work on a faster time frame here. Those holding bearish positions might consider the support levels as opportunities for profit-taking, depending on how the wave counts progress as we go forward.

You can get daily charts and updates for this and other highly traded markets via our subscription page on Substack and on Twitter.

Twitter:  @TradingOnMark

The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.