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The bond breakdown is about to get worse, says trader. Here’s how to play it

The trammels market is getting slaughtered as the U.S. 10-year yield hits its steepest level since July 2011.

The move has TradingAnalysis.com founder Todd Gordon foretokening that a key technical pattern is about to be broken.

Looking at a chart of the TLT long-dated cache ETF, Gordon told CNBC’s “Trading Nation” that recent liability has the chart on the brink on piercing through the bottom of a head-and-shoulders pattern.

— Gordon is specifically talking with regard to a parallel channel that has been taking place for ten years. A head-and-shoulders ornament has appeared that suggests the 20+ Year Treasury ETF (TLT) could be impelling toward the bottom end of the channel, as TLT failed to retest and recapture old highs.

— TLT has specifically confined up time and again from the $115 level before falling overdue renege, and now Gordon believes TLT could finally fall below that frame level.

— This would essentially put an end to a four-decade downtrend in rates and uptrend in relationship prices, according to Gordon.

The trade: Gordon is suggesting buying the September monthly 115 put for $2.14, or $214 per choices contract.

Bottom line: Gordon believes the head-and-shoulders pattern in TLT is a bearish signal that could send coheres plummeting and rates soaring.

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