TLT – Monthly Review
This report analyzes TLT’s recent signals and outlook from multiple technical angles. We review candlestick structure, momentum shifts, and Elliott Wave setups to assess the short-term picture and highlight the key risks and opportunities that could shape the long-term view.
CANDLES
After September’s close, TLT’s path remains unclear. The monthly frame printed a solid Bullish Engulfing that, given the technical backdrop, almost guarantees additional upside. The quarterly, however, tells a different story: the current formation looks like consolidation that could persist for a few more quarters before any renewed leg lower. Short- and mid-term frames are neutral, leaning bullish with some technical support.
Overall: TLT has a higher probability of advancing in 2025—but the move may feel like playing Minesweeper on Windows 3.1 in 1992.
Elliott Wave
I remain concerned about the wide range of corrective options TLT has been tracing since the May low. The mid-term read is also unfavorable: since the October 2023 low, TLT has not produced an impulsive or diagonal advance, implying a lower low may be needed to reset the structure. At this stage, I’m considering a very large wave-4 flat, with its final wave (c) unfolding as an ending diagonal—though multiple confirmations are still required.
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.
SUMMARY
TLT has a solid chance for an extended bounce after the September close—potentially a month or longer—but the move will likely be capped, as the quarterly and larger frames remain bearish.
Elliott Waves indicate the complex correction is ongoing and that a lower low is likely required to resolve the structure. In this environment, we will primarily follow the candles and, for this instrument, the corresponding moves in yields.
Happy Trading!
