CLIFF NOTES: if you look at the chart below, you will see an inverse head and shoulders pattern that had it’s genesis almost a year go – 07/2013. Just recently (the past 3 trading days) we have broken from this neckline ….price on the bonds should start up. Here’s the gameplan — expect the 137 28 level to hold as resistance. (It’s a butterfly sell pattern) and then price should come down to the neckline and here is where we really see the battle between the bulls and bears. All things being equal, the standard gameplan is to trade the return to the neckline and therefore go LONG in/around the 134-135 level. However, if the rates are really going to rise, then this neckline will be defeated and we’ll go thru the black line to the downside. This is the gameplan …
