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According to the Wikipedia article on technical analysis:

Technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

In most markets, past market data for bonds is readily available. In the USA, bond price and volume information collected by FINRA's TRACE facility is widely distributed to data vendors and is viewable by retail investors on FINRA's Market Data Center website. Consider the 10+ year price chart for PepsiCo Inc 5.500% 2040-01-15 callable bond (CUSIP: 713448BP2):

PepsiCo bond price chart retrieved from FINRA's Market Data Center on 2020-09-11

The bond's price chart allows the use of technical analysis by overlaying trend lines, moving averages, support and resistance lines on the chart. And yet I only hear about the use of technical analysis for stocks, futures, commodities and currencies (forex). There aren't many articles or books about technical analysis for bonds.

Why isn't technical analysis commonly used for bonds, even though all the data required for technical analysis is available? Is it because technical analysis doesn't "work" for bonds as well as it does for other kinds of securities? Is there something fundamentally different about bonds that makes technical analysis ineffective?

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  • To get at a full answer to where your question is coming from, it would help to understand what you mean by 'not commonly used'. Do you have evidence for this? Are there specific data points you are comparing? Without getting into whether TA is effective at all, consider that a significant factor in the value of a bond is just the market interest rate, which is effectively set by governing bodies, so that element of bond pricing is not subject to the whims of the market that TA portends to interpret. I have no idea if this truly does limit the real-world use of TA on bonds, however. – Grade 'Eh' Bacon Sep 11 '20 at 13:54
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    @Grade'Eh'Bacon I am under the impression that technical analysis is not commonly used for bonds because: (1) technical analysis articles around the internet always use stocks, futures, commodity and currency examples only; (2) I tried to look for books about technical analysis for bonds, but I had difficulty in finding any; (3) many of my stock market books include some discussion about technical analysis, but none of my bond books mention anything about technical analysis. – Flux Sep 11 '20 at 14:50
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And yet I only hear about the use of technical analysis for stocks, futures, commodities and currencies (forex).

Perhaps you don't know any bond traders who use technical analysis, hence you're not hearing about it?

There aren't many articles or books about technical analysis for bonds.

Technical analysis is about analyzing price and volume data. Therefore, it's applicable to any security for the analyst who is a believer.

Why isn't technical analysis commonly used for bonds, even though all the data required for technical analysis is available?

A quick google turned up multiple sites that provide technical analysis of bonds. The first one one the list provided a fair number of technical indicator values for the 10 year bond today:

Pivot Points:

  • Classic

  • Fibonacci

  • Camarilla

  • Woodie's

  • DeMark's

Technical Indicators:

  • RSI(14)

  • STOCH(9,6)

  • STOCHRSI(14)

  • MACD(12,26)

  • ADX(14)

  • Williams %R

  • CCI(14)

  • ATR(14)

  • Highs/Lows(14)

  • Ultimate Oscillator

  • ROC

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