A lot of us expected after the FED announces it’s interest rate increase for the Bond market to fall. Instead we see her ever so slightly trending bullish.

Whats Coming:

• ZB 30 Year Bond Trendline Support
• Market Adjustment Ahead of FED interest rate decision.
• Analysis using the Ichimoku Cloud

 

What is happening?

Please consider, we all expected to FED to increase interest rates. In fact the expectation was there in September. As you can see in the following chart, the market, and the millions of traders in that market, through a “self fulfilling prophecy” have pushed the market down in expectation of the increase.

 

One Reddit poster wakka54 commented on one of my threads about trading the FED rate hike correctly.

“Today is another example of amateur investors thinking they can take advantage of market changes on the day they happen. The market adjusted for today’s increase months ago.”

Hubert Senters also shares a similar opinion on his future outlook in Bond trading.

I Do Expect A Sell Off

The ZB 30 Year Bond is holding two trendline support areas. If the ZB 30 Year Bond can manage to trade below 155’00 then the opportunity to begin going short will present itself.

We can usually look to the ZN 10 Year Note as a forecasting tool for where the ZB 30 Year Bond will go.

Although we see a “double bottom” on the chart, which will usually indicate a bullish reversal, you can see some thick resistance above it with the Ichimoku cloud. The ZN 10 Year Note is also trading well below the cloud, the turning line, the fast line and the trailing line is also below the cloud.

 

Much like an earlier trade a few weeks ago, we should look for the ZN 10 Year Note to break new lows before we begin to take larger short positions.

 

Hope it helps,

Good luck team!

William