1/ This is Gold!
2/ Treasury’s Next Target
3/ EM Bond Re-emerge
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1/
This is Gold!
After a 10-year uptrend, with interim pullbacks, Gold spent the next 9 years digesting this rise through a consolidation, creating a basing pattern. Thereafter, the price went on a sideways drift for close to 4 years, making higher highs and lower lows, producing a broadening formation also known as megaphone. Six months ago, Gold broke out, confirmed by the RSI going into overbought territory, which is evidence of strong buying interest.
A projected target shy of $3100 can be calculated by taking the height of the basing pattern at its widest spread and adding it to the breakout area. That very same target is also obtained by the 2.618 Fibonacci ratio measurement taken off the September 2011 to December 2015 decline. As long as the price can stay above $2300, the next resistance area will be the so-called psychological level at $3000, notwithstanding periods of consolidation along the way.
2/
Treasury’s Next Target
On this weekly chart, we can see how the iShares 20+ Year Treasury Bond ETF ($TLT) is in a slow process of turning around.
While the price low in October 2023 is lower than its previous low (October 2022), the RSI made a higher low, creating a bullish divergence.
The next price low, in April 2024, made a higher low compared to its previous low, the RSI alleviated from oversold levels, suggesting the selling is abating, which is technically a constructive sign for the Treasury ETF.
$TLT’s price action since mid-2022 produced an inverted head & shoulder pattern. As the ETF has been able to penetrate the neckline, a target can now be projected around $117.
3/
EM Bond Re-emerge
The iShares J.P.Morgan USD Emerging Markets Bond ETF ($EMB) has been in a price recovery mode since its October 2022 low. The price action making higher lows is technically constructive. To help identify important technical levels of support and resistance, Technical Analysts frequently use the Fibonacci retracements. These retracement levels are arrived at by first measuring a complete trend, in this case the January 2021 to October 2022 decline. These calculated levels then act as resistance on the way up and once the price surpasses them, they then act as support levels.
Three weeks ago, the price was able to lift above its 38.2% retracement level, which is another positive technical input in the price chart, as the breakout suggests that the ETF could rally back to the 61.8% Fibonacci retracement, just above $100, notwithstanding interim pullbacks.
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Originally posted 12 September 2024
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