Based on my near-term as well as intermediate-term work, the iShares Barclays 20+ Year Treas Bond ETF (NYSE: TLT) established a very important technical low at 90.47 on Dec 15 off of the 109.34 high from Aug 25. That low was followed by a powerful upleg to 94.21 on Dec 20 that exhibited bullish form, which "warns" us that after the current pullback runs its course, an upside continuation rally should emerge that propels the TLT towards 99-100 next.

Where will the current pullback "run its course"?

Let's notice that so far the weakness off of 94.21 has carved out a double-low last week at 92.49/53. However, to confirm the "double low" as a completed near-term correction, the TLT must hurdle and sustain above 93.30.

Conversely, inability to hurdle 93.30, followed by a decline that breaks and sustains beneath 92.49 should trigger additional corrective weakness that tests 92.34, the 50% corrective support plateau of the Dec upleg. If violated that could press the TLT into the 91.75/50 next support zone.

Should such a deeper correction unfold, I will become even more bullish in my expectation of a powerful secondary upleg off of the 90.47 low.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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