Trading the IEF US-Treasury ETF
Now that Janet Yellen’s statements are known, and now that the expectations for a June rate hike have sharply increased, the US 10-Year Treasury price action should create extremely interesting trading opportunities for investors this week.
At Ridge Capital Markets, we are looking especially at the iShares 7-10 Year Treasury Bond ETF (NYSE:IEF). In our view, it is sitting perfectly on an apparently strong support level at 109.60, and we believe that an upward spike above the SMA50 would be a very bullish technical signal that could make the IEF possibly go towards the 111 level – and even more so if it goes above the SMA20 and closes above it this week.
- This is why we recommend traders to pay special attention to the USD and to the TMUBMUSD10Y performance – especially looking at the above mentioned trading pattern of the IEF.
- We believe that the IEF is offering a great return on investment possibility for traders, and we expect this week’s events to confirm the advantages of this trade.
This is a trade based on the USD currency performance, and on the expectable safe haven plays that are likely to make many investors in financial markets across the world to look for USD-related assets – now that China’s CNY devaluation is getting increasingly noticeable, that fears about EM USD-denominated debt are growing, and that the Fed’s Chair has been more hawkish than at any other time in the previous months.
The IEF ETF is a simple way to trade this safe haven play and we believe that traders will do well to place their bets here, in view of the technical signs that we have mentioned.