Bonds have been hit hard since the highs around the 4th of July last year. Could this big decline, be creating a bottoming pattern? Bottoms Up for bonds?
Below looks at the pattern of TLT over the past couple of years-
CLICK ON CHART TO ENLARGE
Last summer when bonds were peaking, it was easy to find bond bulls, as bullish sentiment for bonds stood at 90%. Today its not so easy to find bond bulls!
TLT could be attempting to create a reversal pattern (inverse head & shoulders) following a 20% decline from the highs. The inverse H&S pattern is far from proven at this time. If TLT would break above neckline resistance, it would increase the odds that this reversal patterns is important to the bond market.