Don't Ignore This Chart!

Treasury Bond ETF Hits Major Road Block


The unadjusted 20+ YR T-Bond ETF (_TLT) surged to resistance on Friday and backed off on Monday. The long-term trend is down and this resistance level could mark a near term top.

First note that the chart shows unadjusted prices for TLT by preceding the symbol with an underscore (_TLT). This removes the monthly distributions from the price. Second, note that the long-term trend is down because the 50-day EMA is below the 200-day EMA and price hit a 52-week low in May.

On the price chart, TLT hit resistance in the 122-123 area in late March, late May and early July. Also notice that RSI reached the 70 area each time. TLT is once again challenging resistance in this area and RSI was near 70 on Friday. Thus, the ETF is short-term oversold and at resistance. Giving the long-term downtrend, this setup could foreshadow a near-term peak (reversal).

Overall, notice that TLT has been in a trading range since February. The ETF is at the top of this range and the current swing within the range is up. The August 24th low marks upswing support at 121 and this is the first level to watch for a short-term reversal.

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Topics for Tuesday, August 27th:

  • Bull Flags in XLK, HACK and SKYY
  • XLI Breaks out as XLF Fills Gap
  • XLE - Support Break vs. Oversold Setup (plus XES, USO)
  • XRT Leads Consumer Discretionary SPDR (plus ITB)
  • IAI Tests Support as KRE Turns Up (plus SCHW and ETFC)
  • Stocks to Watch: ANSS, FFIV, JBHT, LMT, ULTA and more
  • Click here to Watch

Plan Your Trade and Trade Your Plan.

- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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