Must-See Charts: Trading the Volatile U.S. Dollar, Bond Yields, Gold, Oil

NEW YORK (TheStreet) - U.S. Treasury yields are on the rise as investors and strategists debate the timing of the first hike in interest rates by the Federal Reserve in years. Gold slumped but a bottoming pattern appears to be in place. Crude oil and the euro versus the dollar appear stuck in trading ranges.

There are exchange-traded funds investors can use to trade these markets. The 20+ Year Treasury Bond ETF (TLT) is down 6.6% for the year to date with negative daily and weekly charts. The SPDR Gold Shares ETF (GLD) is down just 1.2% year to date with negative daily and weekly charts. The iShares GSCI Commodity-Index Trust Fund (GSG) is down 3.2% year to date with negative daily and weekly charts. The Deutsche Bank USD Index (UUP) is up 5.5% year to date with a neutral daily chart and positive weekly chart.

Let's start off by looking at the daily and weekly charts for the yield on the 30-Year U.S. Treasury bond, which is one of the three most important inputs to stock market valuations. As the yield on the bond rises the relative value of stocks decline.

Here is the daily chart for the 30-year bond:


Courtesy of MetaStock Xenith

The yield on the 30-year U.S. Treasury bond had a close of 3.110% on Friday and has been in a rising trend since setting an all-time intraday low of 2.221% on Jan. 30. This benchmark yield rose above its 200-day simple moving average on May 4 and traded as high as 3.128% on May 12. This yield then consolidated lower retesting its 200-day simple moving average on May 29 when the yield was 2.847%. This yield traded as high as 3.159% on June 4.

Here is the weekly chart for the 30-year bond:


Courtesy of MetaStock Xenith

Last week the 30-year bond yield tested its 200-week simple moving average of 3.159% after holding its key weekly moving average of 2.860% as the week began. If the 200-week simple moving average holds this week another consolidation is likely as strategists, investors and Fed speakers discuss the timing of the first rate hike by the Federal Reserve.

Investors seeking the safety of the U.S. Treasury market can trade yields like a stock using the 20+ Year Treasury Bond ETF. This exchange-traded fund is a basket of U.S. Treasury bonds with maturities of 20-Years to 30-Years. The price of the bond ETF rises when yields are falling and declines when yields are rising.

The bond ETF had a close of $117.60 on Friday and is down 6.6% year to date as yields rose. The ETF set its all-time intraday high of $138.50 on Jan. 30, the day of the lowest yield. The bond ETF is below its 50-day and 200-day simple moving averages of $125.15 and $124.07, respectively, and a "death cross" is likely where the 50-day simple moving average declines below the 200-day simple moving average.

The weekly chart for the bond ETF is negative ending last week below its key weekly moving average of $123.18 and nearly tested its 200-week simple moving average of $117.06. The momentum reading of 21.89 is down from a reading of 24.60 on May 29.

Investors looking to buy the bond ETF should place a good till canceled limit order to purchase the ETF if it drops to $114.44, which is a key level on technical charts until the end of the June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $132.13, which is a key level on technical charts until the end of the year.

Here is the daily chart for Comex gold.


Courtesy of MetaStock Xenith

Gold had a close of $1,168.1 the Troy ounce on Friday above an uptrend line that connects the low of $1,130.4 set on Nov. 7 and through the low of $1,141.6 set on March 17. Trend begins the week at $1,149.0. Gold is below its 50-day and 200-day simple moving averages of $1,196.8 and $1,211.9, respectively.

Here is the weekly chart for Comex gold.


Courtesy of MetaStock Xenith

Gold has been below its 200-week simple moving average since the week of May 17, 2013 with this average now a ceiling of $1,449.2. The weekly chart is negative with last week's close below the key weekly moving average of $1,191.4.

Investors looking to invest in gold like a stock should consider the SPDR Gold Shares ETF which is backed by gold bullion and matches the performance of Comex Gold futures contracts

Investors looking to buy the gold ETF should place a good till canceled limit order to purchase the ETF if it drops to $106.23, which is a key level on technical charts until the end of June.

Investors looking to book profits should place a good till canceled limit order to sell the ETF if it rises to $113.41 and $114.27, which are key levels on technical charts until the end of June or this week, respectively.

Here is the daily chart for Nymex crude oil.


Courtesy of MetaStock Xenith

Crude oil had a close of $59.13 per barrel Friday above its 50-day simple moving average of $56.61 but below its 200-day simple moving average of $64.74. Oil traded as low as $42.03 on March 18 which was a "key reversal day" where the close that day of $44.66 was above the high of $44.20 on March 17. The 2015 high has been $62.58 set on May 6.

Here is the weekly chart for Nymex crude oil.


Courtesy of MetaStock Xenith

Oil has been below its 200-week simple moving average since the week of August 22, 2014 with this average now a ceiling of $89.78. The weekly chart is positive but overbought with last week's close above the key weekly moving average of $57.67.

Investors trading crude oil like a stock are using the iShares GSCI Commodity-Index Trust Fund, which is 70% to 75% weighed to energy and crude oil. The commodity ETF set a low of $18.83 on March 18 which turned out to be a key reversal day with a close above the prior day's high. This ETF is just below its 50-day simple moving average of $20.95 with a Friday close of $20.88. The 200-day simple moving average is $23.71. The weekly chart is negative with the ETF below its key weekly moving average of $21.10.

Investors looking to buy the commodity ETF should place a good till canceled limit order to purchase the ETF if it drops to $14.51, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $23.20, which is a key level on technical charts until the end of June. A key level of $21.67 should be a magnet until the end of June.

Here is the daily chart for the euro versus the dollar.


Courtesy of MetaStock Xenith

The euro had a close of 1.1111 on Friday above its 50-day simple moving average of $1.099 but below its 200-day simple moving average of 1.1784. The euro traded as low as 1.0456 on March 16 and traded as high as 1.1466 on May 15.


Here is the weekly chart for the euro versus the dollar.


Courtesy of MetaStock Xenith

The weekly chart for the euro is neutral with the currency just above its key weekly moving average of 1.1077 but with declining momentum. The euro has been below its 200-week simple moving average since the week of August 15, 2014 with this average now a ceiling of 1.2968.

Investors looking to trade the greenback should use the Deutsche Bank USD Index which represents the U.S. dollar versus a basket of currencies; the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. The currency ETF has a close off $25.30 on Friday just below its 50-day simple moving average of $25.39 with its 200-day simple moving average of $24.19. The weekly chart shows this ETF positive favoring the dollar closing Friday above its key weekly moving average of $25.27 and well above its 200-week simple moving average of $22.45.

Investors looking to buy the currency ETF should place a good till canceled limit order to purchase the ETF if it drops to $24.10, which is a key level on technical charts until the end of June.

Investors looking to reduce holdings should place a good till canceled limit order to sell the ETF if it rises to $26.59, which is a key level on technical charts until the end of June.

Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share price direction.

Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue while the 200-day simple moving average is in green.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2007 and thus includes the Crash of 2008, then the current bull market for stocks that began in March 2009. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.

A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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