People in business communicate with one another through various types of channels. The more complex the message, the more intimate the communication needs to be or the “richer†the channel.
My days on the Commodities Exchanges gave me several advantages. Communication became rather intimate thus rich when the orders flowed into the pit and the “noise†level indicated a scant or feverish pitch of buying or selling.
However, without the multi-sensory benefits of “being there†on the floor, a plethora of other indicators and fundamental stats have replaced that channel of communication.
Most of us will never get to hang out with Janet or the rest of the Federal Reserve Presidents. To have “rich†and “intimate†communication concerning the future of Interest Rates, the above “channel of the technical kind†might help.
Note that the timeframe on this chart is monthly and goes back to 2008. My purpose is to try to determine whether or not the longer term end is nigh for the 20+ Year Long Treasury Bonds. Rarely have I seen a channel going back 8 years this clean.
What is a price channel? A price channel is a continuation pattern that slopes up or down and is bound by an upper and lower trend line.
The upper trend line marks resistance and the lower trend line marks support. Price channels with negative slopes (down) are considered bearish and those with positive slopes (up) bullish. For explanatory purposes, a “bullish price channel” is a channel with a positive slope.
In a high and wide channel – if the price breaks out from either the up or downside of the parallel lines and then proceeds to trade back into the channel – a trap is often set for the bulls or the bears.
Have the TLTs set a trap for the Bulls?
In July, TLT touched and even pierced the top of the channel and then closed just beneath it. One week into August, TLTs began with a gap down in price from July’s closing levels. Presently, the price remains lower and more notably, back inside the channel’s top trend line.
