Monday, June 4, 2012
By Scott Pluschau
It's been a while since I posted anything on the 30 Year Treasury Futures. I have been on the sidelines for some time. Recently there has been two days of "blowoff volume" and this futures contract now has my attention again.
Notice on the daily chart right hand side below how volume has recently exceeded open interest. The complete study of the auction includes volume and open interest. This is a sign of a market with rampant speculation. A market with rampant speculation is a market that is ripe for a reversal. Price can move violently in the opposite direction when a market has exhausted itself on blowoff volume.
I will be taking a close look at the COT reports and the auction profile for signs of "distribution" from strong hands to weak hands. If I can determine good enough probabilities measured to the reward to risk, than I will be ready to strike at a favorable trade location if I feel I have an "edge". At that point a favorable trade location may be just a simple bearish reversal pricing pattern.
(Click on chart to expand)
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Source: http://scottpluschau.blogspot.ca/2012/06/blowoff-volume-on-30-year-treasury.html
