Analyzing TLT's Current Technical Setup

8 apr

Recent price action in TLT has raised questions about whether the recent sell-off reflects foreign selling pressure, potentially driven by liquidity shifts into equities, or simply represents healthy profit-taking. Key economic data from Japan may provide context to this move, as Japan's current account surplus hit a record high at JPY 4,060.7 billion in February 2025, driven by strong exports and reduced imports.

Technical Analysis:
TLT experienced a sharp reversal after testing resistance levels around $93-$94, indicating significant selling interest at these upper bands. Currently, the price is approaching crucial support levels, with key areas of focus being $89.78, $89.20, and $88.60. Price action in these zones will be critical to watch for confirmation of further direction.

Bullish Scenario:

Entry: Look for support confirmation around $89.78 or slightly lower at $89.20.

Profit Targets:

First target: Rebound towards the previous resistance around $91.25.

Second target: Extended move towards the upper resistance zone around $93.

Stop Loss: Clearly place a stop-loss below $88.60, protecting against a deeper breakdown.

Bearish Scenario:

If price decisively breaks below $89.78 with strong volume confirmation:

Entry: Consider short positions on confirmed break and retest failure below $89.78.

Profit Targets:

First target: Next immediate support at $89.20.

Second target: Stronger support area at $88.60.

Stop Loss: Set a stop-loss slightly above $90.30 to manage risk effectively.

Market Context:
Japan's record current account surplus could signify reduced foreign buying pressure on US Treasuries, potentially contributing to the selling in TLT. This macroeconomic backdrop underscores the importance of watching these key technical levels closely.

Final Thoughts:
Keep a close eye on volume and RSI for confirming indicators, ensuring trades are executed with clear risk management. Given the macroeconomic context and current technical setup, caution and flexibility in trading decisions remain essential.

9 apr

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