TLT stock analysis 25 August: is it a buy or sell?

Treasury long-term bonds may remain range-bound in the near term.

Michael Burry, popular for his winning bets made against the subprime mortgage crisis, has made a bold bet that long-term US Treasuries will fall.

Bloomberg highlighted that Burry’s Scion Asset Management had increased its bearish position on the iShares 20+ Year Treasury Bond ETF, from owning $172 million of puts at the end of March to $280 million of puts at the end of June. This position will make money if TLT drops in price as Treasury yields go up.

The expectation is that the strengthening economy will force the US Federal Reserve to act and raise rates. All eyes will be on Fed chair Jerome Powell when he speaks at the Fed's annual economic symposium in Jackson Hole, Wyoming on Friday. 

According to Reuters, Mikael Jacoby, head of continental European sales trading at Oddo Securities, said: "I can't see a shift in monetary policy in the next two to three months."

A Bloomberg survey projects the 10-year yield to rise and end the year at 1.6%. Will TLT stock go up or down? Read our 20+ Year Treasury Bond ETF analysis to find out.

TLT share price technical analysis: weekly chart

TLT weekly price chart
TLT weekly price chart. Source: Currency.com

TLT’s stock price is currently witnessing a relief rally after declining from a high of $171.70 in August 2020 to $132.56 in March 2021. Last week, the ETF rose 1.33% to end the week at $149.80.

The relief rally is facing selling at the 50% Fibonacci retracement level at $152.15, but the bears have not been able to pull the price below the 20-week exponential moving average (EMA). This suggests that the bulls are attempting to extend the recovery.

If buyers push the price above $152.15, the rally could extend to the 61.8% retracement level at $156.76. The bears are expected to mount a stiff resistance at this level once again.

If the price slips below the 20-week EMA, short-term traders may book profits, which could pull the price down to $140 and then to the strong support at $132. 

TLT share price technical analysis: daily chart

TLT daily price chart
TLT daily price chart. Source: Currency.com

TLT’s stock price has formed a symmetrical triangle pattern in the short term, which indicates indecision among the bulls and the bears. Usually, the symmetrical triangle acts as a continuation pattern but in some instances, it can also signal a reversal.

The price turned down from the resistance line of the triangle on 20 August. If bears pull the price below the 20-day EMA, the next stop could be the 50-day simple moving average (SMA).

A break below this level may challenge the support line of the triangle. A break and close below the triangle may open the doors for a decline to $140, and then to the pattern target of $138.

Conversely, if the price turns up from the current level and breaks above the triangle, it will indicate that bulls have overpowered the bears. That could result in a rally to $152 and then to $158.

TLT stock: buy or sell at these levels?

TLT’s stock analysis shows the formation of a symmetrical triangle on the daily chart, indicating uncertainty among the bulls and the bears. Trading inside the triangle is likely to be volatile and random. The next directional move is likely to start after the price escapes the triangle.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.

Trade TLT stock: TLT shares price

iShares 20+ Year Treasury Bond ETF
Daily change
147
Low: 145.43
High: 147.39

Further reading: ETFs explained

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