Monday, October 25, 2010

Treasuries and the opening range theory applied

Unfortunately I don't have a futures account and I'm not sure the best way to trade treasuries.  Currently I am long TBT, which translates to myself shorting the long term Treasury.  In essence I believe that rates will gradually rise.

Please note that the green lines represent the opening range defined by the activity of the market based on the beginning of the month (current month).  Blue lines represent resistance based on activity of the previous month.  The blue lines in this case represented resistance, and now represent support.  The concept is simple if the market breaks through the opening range in the beginning of the month, the direction it breaks will define further direction in the market if above resistance (blue lines) or through resistance (blue lines).  In this case below, the break is in the up direction and the fact that it broker prior months positions this is bullish.  Where does one get out of this trade, the answer is a strong break below the the bottom of the opening range.

 If you look at the above chart you see October through today of TBT, which aims itself in taking advantage of long term treasuries declining in value.  I have been long since 31.50 and I am looking to add to this position.  I have a limit order in to purchase at 32.15 and I hope it gets hit.

This is my first post, and I have not explained what is meant by the title of the blog, The Opening Range, I do intend to explain how it works and how two indicators keep you on the right side of the market consistently and help you look at the market with a view that is consistent with the markets.

Above is the 30 year bond futures.

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