The 10-year yield jumps yesterday to 2.72% and maintains this level this morning. Note the 2-month sideways channel range through 2.45%-2.75%. The red lines show a rising wedge in play with negative divergence for the indicators so a drop in yield would be expected moving forward. The thin blue lines show a potential ascending wedge which is bullish but the indicators do not reinforce an upside move. The weekly chart shows negative divergence although the MACD line has a bit more juice. Thus, a move across these current yield levels, 2.60%-2.75% may continue for a few days or week or two, but down is the direction forward overall. The weekly chart thick blue lines show an inverted H&S with head at 1.40%, and neck line at 2.07% that targets 2.74%, achieved. Thus, this inverted H&S pattern is fulfilled, however, the thin lines show two optional neck lines at 2.30% and 2.40% so this provides further upside targets at 3.20% and 3.40% in future months or years.
The thrust higher in yields was very strong and the ADX on the daily is above 30 for 3 months verifying the strength of the trend. The ADX is now leaking running out of gas. The 200-week MA is 2.55% so pay attention to this level as a pivot. The move higher never properly back kissed the key inverted H&S neck line levels so a move back to the 2.40%, 2.30% and/or 2.07% levels would be prudent. Projection is for lower yields for the weeks and months ahead. Adapting this to the tradeable ETF's, TBT and TLT, the TBT mimics the TNX charts above so it would be expected to trail lower moving forward while the TLT is expected to be basing and would be the long play forward (wait a few days for yield to place its top). This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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