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That correction might be a bit deep, but I agree bonds are due to come
off. My count suggests that prices rose in three waves to the recent
highs above 124. Then the question is whether the drop from the high was
the extent of the correction. That the drop was only three waves
suggests that it will be hard to fall below 121-30 and that what we are
correcting now is the rally off 122-00 meaning an overlap of 122-26
would then not be expected. A break of that implies we are correcting
deeper but even then, the fib retrace (38%) is at 122-10 and 50% is at
121-21. I doubt we'd get lower than the latter. So, I agree that being
short is correct here, but I'd get real careful as 123 breaks and might
even consider looking for a place to get long.
Indicators are near fairly neutral levels too, which do not call for
such a large drop. Again, not saying its impossible, but I'd rate the
odds of a move below 121-30 at less than 25% and we really ought to hold
122-26. 13-day ma is at 123-02+, 21-day at 122-18 and 34-day at 121-20.
Steve Poser
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