A couple of days ago in The Bond Rally Is Not Over, the Gann Fan Lines helped show the potential for a lot more upward movement in the iShares iBoxx Investment Grade Corporate Bond Fund, (LQD).
But it also illustrated that there is room for a pullback within the rising trend. From the chart below there are signs that is happening right now. The key signs are within the last three days. First, the price chart printed a doji candle, opening and closing at the same place, and confirmed it as a reversal by moving lower the next day.
iShares iBoxx Investment Grade Corporate Bond Fund (LQD)
Thursday’s candle was even larger. This turn lower started on big sell volume as well. Next the Relative Strength Index (RSI) is moving lower from a technically overbought condition. It is also nearing a cross to negative on the Moving Average Convergence Divergence indicator (MACD). Finally it is extended from the rising 50-day Simple moving Average (SMA) a source of support since December. Look for a a change back higher or a hold at that 50-day SMA as a sign that bonds are back on course.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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