TLT – Annual Review
The final three trading days of the year were indeed stormy for TLT, and today we turn our focus to the annual closure and the outlook for this heavily traded instrument. In this update, we examine the key candlestick formations, technical indicators, and Elliott Wave structures to map risk levels, identify the dominant setups, and outline the highest-probability paths ahead.
CANDLES
TLT closed every frame from the daily through the annual in either a clearly bearish or neutral-leaning bearish posture. Long-term trends remain firmly bearish, and the mid-term has now aligned with that direction as well.
As discussed in detail in the Bond Market Annual Review, the yield-curve setup is being cleanly mirrored by TLT across multiple time frames. The price action remains consistent with that broader rates narrative.
As outlined a month ago, TLT has completed a Head & Shoulders formation, and the downside targets derived from that structure remain unchanged.
Elliott Wave
Long Term
I continue to maintain a long-term bearish outlook for TLT, a stance I have held consistently since 2022.
Short Term – Flag
There are no changes to the potential flag targets. If TLT makes a new lower low, below the 2025 low, it would open the path toward the double-target level implied by the Head & Shoulders structure.
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 continues to align closely with the broader U.S. bond market picture discussed in the recent annual review. All frames from daily to annual closed in bearish or bearish-leaning territory, with long-term trends firmly negative and the mid-term now fully confirming that stance. The structure remains consistent with rising long-end yields and a steepening bias in the curve.
From a technical and pattern perspective, nothing has changed. The previously identified Head & Shoulders formation remains valid, and the flag targets are intact. A break to a new low below the 2025 trough would materially increase downside risk and open the path toward the double-target implied by the pattern. Until invalidated, TLT remains a long-term bearish instrument, mirroring the evolving regime in U.S. rates.
Happy Trading!
