A Bond Pullback Before More Upward Movement

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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