U.S Junk Bonds May Surge Higher Despite Repo Funding Squeeze
Kelvin Wong September 18, 2019 10:14 AM
SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
click to enlarge charts
Key Levels (1 to 3 weeks)
Pivot (key support): 107.70
Resistances: 109.46, 111.00 & 112.78
Next support: 105.55
Directional Bias (1 to 3 weeks)
Bullish bias in any dips above 107.70 for JNK and a break above 109.46 reinforces another potential upleg sequence to target 111.00 follow by the next significant medium-term resistance at 112.78.
However, a break with a daily close below 107.70 negates the bearish tone for a corrective slide to retest the major range support at 105.55.
- Since 30 Apr 2019, the price action has evolved into a 5-month “Cup & Handle” range configuration after a prior multi-month uptrend from 28 Dec 2018 low of 98.77. The “Cup & Handle” range configuration tends to indicate a potential bullish consolidation phase after a prior uptrend and a break above the “Cup & Handle” range resistance triggers the start of another up-trending phase.
- The “Cup & Handle” range resistance stands at 109.46.
- Momentum remains positive. The daily RSI oscillator has staged a leading bullish breakout from a significant corresponding descending resistance (in parallel with the Cup & Handle resistance). In addition, the daily RSI oscillator has not reached an extreme overbought level.
- The 112.78 medium-term resistance is defined by the former major range support from May 2012/Dec 2014, the exit target projection of the “Cup & Handle” and the 0.764 Fibonacci expansion of the prior uptrend from 28 Dec 2018 low to 30 Apr 2019 high projected from 03 Jun 2019 low.
Charts are from eSignal
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.