Bonds Turn Higher, but Ultimate High Is In

01/07/2020 9:16 am EST

Focus: BONDS

Al Brooks, MD

Professional Trader, Author, Lecturer, Brooks Price Action, LLC and Brooks Trading Course

Bond are due a rally but October all-time high should hold, writes Al Brooks.

The 30-year U.S. Treasury Bond futures are reversing up from the bottom of a four-month trading range. Any reversal up will probably be minor and last two to three weeks.

The 30-year Treasury bond futures formed an outside up bar last week (see chart). There is now a double bottom with the Nov.  7 low. In addition, last week’s low is the third leg down in a truncated wedge bull flag. The first two lows were Sept. 13 and Nov. 7. Traders should expect higher prices over the next couple of weeks.

Treasury Bond Futures weekly candlestick chart has double bottom bull flag

The first target is the Dec. 3 lower high. If the bulls break above that, then the Oct. 11 and August highs are the next magnets. But, because of the 10-year nested wedge top on the monthly chart, the odds are against a big breakout above the Oct. 11 all-time high. The trend over the next 10 years is down, even if there is one more brief new high.

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