iBoxx $ Investment Grade Corporate Bond Fund (LQD) has formed a small Head & Shoulders reversal pattern after breaking out of a larger bearish Wedge and completing a bearish Flag (see previous post). Volume on Friday was 33% 50ADV and the highest in three weeks. Neckline resistance is at 105.65. The close on Friday was 105.68, at the neckline resistance and the high of the day.
The difference between the neckline and 103.58, the low of the pattern is 2.07 which gives us a measuring objective of 107.72 as a minimum target price. As of now that looks to be around the resistance area of the larger uptrend line.
Resistance of the larger uptrend was found at 107.19 so the target would indicate a new high possible for LQD. That’s of course if the pattern follows through as indicated.
The Head & Shoulders bottom reversal has formed at the end of a down trend, but the trend was not very long and therefore extra caution should be taken. A clear breakout should occur on Monday with volume to signal buying continuing to come into this ETF as confirmation for Friday’s volume increase.
LQD ETF 1-Year
