We had been calling for a continuation of the bounce in the US Treasury market with 116.115 as the target area. This was achieved on Friday as we just popped through here to post a high of 116.13. Yesterday again saw us take a look at this level only reaching 116.11 on this occasion. Early trade today on this all sessions chart has seen us recover from a weaker opening but overall we are nervous of taking on longs here whilst the above mentioned bold level is still doing a job. If we begin to slide then we will need to keep an eye on 114.145 although there seems no realistic chance of threatening this today. On a slightly positive note by printing above 115.115 we have negated the Dow Theory.
Indicators in Play
Charles Dow defined a bear market as a series of declining peaks and troughs. The opposite applies for a bull trend.
Fibonacci introduced his sequence of numbers to mathematics back in the 1200’s. These numbers appear in all walks of life but have an eerie influence on trading. We use the 38.2 level as an indication of the strength of the correction or indeed if the longer-term trend has changed contact.
Summary
Our upside objectives have been met and just above here we have our 38.2 Fibonacci Retracement level of the down move from the 17th of March at 116.185. At this point we will be looking to short with a stop above this level.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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