US 5-year note consolidates
The treasury markets have been very exciting lately. Throughout the turbulence last week, we saw sharp spikes up on all durations. It was extremely overbought, and many trading models took their profits off the tables during this extreme phase. Now, however, we have backed off the overbought levels but remain in a very strong bullish phase. This current consolidation may prove to be a safer entry point.
In the chart above, trade points are marked out for a counter trend trading model. This model enters into the direction of the main trend but only after a significant pullback. The model measures this pullback from the last peak and normalises the distance to current volatility.
Management and risk description
This trading model uses a fixed stop and target in the market. This way, the potential gain or loss is known in advance.
Entry: Enter on current levels, around 120'10.
Stop: Firm stop at 119'20.
Target: Take profits at 121'22.
Time horizon: Around two weeks.
December contract of US 5-year treasury
-- Edited by Kevin McIndoe
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