Do You Think Interest Rates Are Heading Higher?

Last week I wrote an article for about a possible short-term support zone.  However, now there is another interesting trade set-up developing.  There is a heavy resistance zone between 161’14 and 163’02.  I will be looking to short inside this zone with the potential downside targets being the recent low at 158’22 and the top of my potential support zone at 157’08.  This resistance zone has a good amount of supporting factors, which are:

  1. Change of polarity (old support becomes new resistance)
  2. 200 DMA
  3. Monthly R1 pivot point
  4. 34 EMA wave
  5. 100 DMA
  6. 6 Fib symmetrical retracements
  7. Resistance cluster of Fib extensions (60m)

This entire zone is potential resistance, but I will be focusing closely on the 161’20-162’17 zone.  This area has the greatest concentration of supporting factors.  The pattern fails above 164’10.  You could look to short the 30-year bond futures (ZB) or make some bearish option plays in TLT for a more cost-effective trade.  Either way, make sure you limit your risk and look to scale out at the downside targets I mentioned.