TLT – Weekly Analysis

CANDLES

TLT ended the week with a bullish candle on the weekly frame, suggesting there’s some potential for further upside. The daily has established a bullish trend, but the candle formations are somewhat unusual for a sustained rally. While the short-term odds remain moderately bullish, the long-term outlook doesn’t appear ready to shift away from its bearish stance. One particular concern is the quarterly frame, which is almost certain to close with a bearish signal.

The broader outlook continues to favor the bearish path.

Classical Pattern – Flag

The flag is not confirmed yet, but the wave structure within the outlined formation remains corrective, supporting the hypothesis.

Technical Event (Historical)

As TLT recorded an extremely rare and impactful technical event on the monthly frame, I will keep the following piece discussed in the November 2024 monthly report for a reference:

The monthly frame, despite closing with a green candle, is currently viewed as a bearish continuation candle. This interpretation is supported by several technical indicators, most notably the freshly recorded 50/200 monthly bearish cross—a massive and concerning development.

Since I could not find a very long-term dataset for US20Y or US20, I extrapolated the event using the inverted US10Y dataset, which closely mirrors US20Y and has data extending back to 1913. As shown in the chart below, a similar sequence of 50/100, 50/200, and 100/200 MMA bearish crosses occurred in the early 1950s. That sequence is now repeating. Most likely, the 100/200 MMA cross will be recorded in early December (it was).

Adding to the concern, the first wave off the top (on the inverted scale) was strongly impulsive. The key question now revolves around the length and duration of wave 2/B before the next major move down. Will it stretch over another year or two, or has a sharp zigzag already completed? The upcoming annual closure will likely provide significant answers.

ELLIOTT WAVES

Mid Term

The mid-term outlook remains unchanged.

SUMMARY

TLT has possibly formed a short-term bottom, suggesting better chances for a bounce in the near term. However, the recent upward move appears corrective in nature and is expected to be limited, with a higher probability of eventually resolving downward and seeking new lower lows. The long-term candles and technicals continue to support a sustained decline, although this may unfold over the next quarter or more.

At this stage, while the short- and mid-term odds are neutral to moderately bullish, TLT remains bearish on the monthly and larger time frames. A strong move in either direction could shift the current monthly outlook on the last day of June, but the probability of such a decisive reversal is low.

Happy Trading!