Two weeks ago I highlighted a crucial area in the Treasury Bond ETF (NYSE:GOVT) here. The price of the ETF was breaking support of both a rising channel and a horizontal consolidation zone, once resistance. Signs were mixed as to which direction it would head, a continuation lower or a reversal. That question is being answered this week, at least for the short term.
The chart below shows the price action since July 7th has supported a reversal to the upside. It is back over the 50 day SMA. Back over the rising channel. Back over the prior resistance from consolidation. Momentum is also swinging to the upside. The RSI is breaking the mid line as it rises. The MACD is turning up and about to cross. So what now?
The turn to the upside sets up a Positive RSI Reversal. This is when the RSI make a lower low but price does not. The low in price in May coincides with the last low in the RI. And July 7th was a lower low in the RSI but not in price. This set up gives a target to the upside to 131.24, over 5% from the current level. Symmetry would suggest it might take until early August to get there. Using the July dip low as a stop this creates a great reward to risk ratio.
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