Sunday, July 7, 2013

TNX Weekly and Daily Charts Inverted H&S Short-Term Negative Divergence

Here is another look at the weekly chart to study the inverted H&S more closely. The resistance at 2.85%-ish forms a confluence with the apex rising green wedge hinting that yield prints in this area are likely.  The green lines for the indicators show the long and strong behavior although RSI and stochastics are overbot. The 200-week MA is 2.57% and it is prudent for yield to come back for a back test of this important level.

On the daily chart, note and bond buyers have something to cheer about. The red lines show negative divergence for the indicators along with overbot RSI and stochastics. The ROC wants to see another yield high print so a jog move may occur over the next couple days but the daily chart says a negative divergence spank down is needed right now. A play such as the TLT ETF would be considered on the long side. The yield will likely want to explore the 2.57% level and also the 2.3%-2.4% gap. This would allow the negative divergence on the daily chart to play out in the coming days, say a couple weeks or three, but the long and strong profiles on the weekly chart will enter the picture again and move yields upwards to play around at the upper long-term trend line test at 2.8%-2.9%. Projection is a pull back in yields from this 2.74%-2.85%-ish level to start digesting the big move, down to 2.3%-ish, and then back up again, overall moving sideways through 2.2%-2.9% for the weeks and months forward. 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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