Potential Price Channel Melt-Up Set-Up on the TED Spread
The TED spread has a potential price channel melt-up set-up on the chart. After confirming a price channel with a period of coiling, the TED spread surged up to break the channel top yesterday in the channel’s critical decision wave.
The set-up would usually put in a small pullback today. If the TED spread then breaks out past the initial surge high, it would usually be breaking out into a melt-up that could take it back to the 2016 high or higher.
Here’s what Econbrowser.com says about the TED spread:
[It’s] the gap between 3-month LIBOR (an average of interest rates offered in the London interbank market for 3-month dollar-denominated loans) and the 3-month Treasury bill rate. The size of this gap presumably reflects some sort of risk or liquidity premium.
It’s an interesting development with the stock market reaching critical decision levels (see this morning’s earlier post).
The melt-up set-up would be cancelled by a return of the spread to the channel bottom or with a stall-out into a rising wedge twining up the channel top.