Sep 08 2007
US Treasuries Are On Fire
When a security reaches a level of resistance, it is often a good idea to look for weakness and short it. Likewise, when a security reaches a level of support, it is often a good idea to look for strength and go long. It is at support and resistance levels where price action can work in your favor, or it can go badly against you. If resistance is firmly broken, the price of the security can skyrocket. Likewise, if support is firmly broken, the price of the security can fall like a rock. Adding to the complication is that sometimes there are headfakes in both directions: a security may poke its head above resistance and then fall like a rock and a security may dip its tail below support and then bounce strongly.
Last week I blogged that even though the 5-Year Note Price finished the week above the crucial 106.5 level, I did not feel that the 106.5 level had been convincingly broken. I was slightly worried that it was a headfake.
It turns out that it wasn’t a headfake.
I still believe that 110.1 is attainable soon, but I expect some retest of the 106.5 level along the way.