The Bond King Bill Gross hints at how he uses technical analysis
Janus Capital's Bill Gross looks at the same technical patterns is the rest of us sub-billionaires. He wrote today about inverted head and shoulders patterns in bonds. He calls them reverse head and shoulders and he highlights them "in all global bond markets."
What's he talking about?
The head & shoulders pattern is one of the most well-known signs of a top or bottom in a market. That someone as revered as Bill Gross uses it, is incredible. Here is an example with 10-year yields.
US 10-year yield technical analysis
It's not a textbook example but if it's good enough for a billionaire bond traders, it's good enough for me.
The measured target of that move is another 80 basis points higher to approximately 3.20%.
In general, that's good for the US dollar but only insofar as US yields move higher than their rivals. One place where there's just no way yields could move that high is Japan so it bodes well for USD/JPY longs.
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