Tuesday, September 25, 2012

Long-term rates about to go higher

According to the chart of the Proshares Trust Short 20-year treasury (ticker TBF) rates on long-term treasuries are set to go higher.


This ETF trades inversely to the price of the 20-year treasury, hence it moves more-or-less inline with interest rates on the bond. Since bottoming on July 25, the price of TBF has been increasing on expanding volume. More importantly, the two retracements in the price (one that began on August 16 and the other September 14) have been on contracting volume levels. This suggests to me that traders have been gauging the market for higher prices. This in conjunction with a firming in the RSI and MACD leads me to conclude that the TBF will, at least, test the April 2012 price range.

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