A Bond Pullback Before More Upward Movement
- Posted by Greg Harmon
- on October 19th, 2012
A couple of days ago in The Bond Rally Is Not Over the Gann Fan Lines helped show the potential for a lot more upward movement in the iShares iBoxx Investment Grade Corporate Bond Fund, $LQD. But it also illustrated that there is room for a pullback within the rising trend. From the chart below there are signs that is happening right now. The key signs are within the last 3 days. First, the price chart printed a doji candle, opening and closing at the same place, and confirmed it as a
iShares iBoxx Investment Grade Corporate Bond Fund, $LQD
reversal by moving lower the next day. Thursday’s candle was even larger . This turn lower started on big sell volume as well. Next the Relative Strength Index (RSI) is moving lower from a technically overbought condition. It is also nearing a cross to negative on the Moving Average Convergence Divergence indicator (MACD). Finally it is extended from the rising 50 day Simple moving Average (SMA) a source of support since December. Look for a a change back higher or a hold at that 50 day SMA as a sign that bonds are back on course.
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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