Tuesday, October 14, 2014

TYX 30-Year Bond Yield Loses 3% First Time Since May 2013 Island Reversal

The TYX 30-year bond yield loses the 3% level for the first time since May 2013. Note how yield retreated down to the pink line at 3.04%-ish level then collapsed to 3% in an instant. This represents a collapse through the gap from May 2013 creating an Island Reversal pattern. The yield is at the lower channel trend line and the indicators are setting up with positive divergence (green lines) although in the shorter term the RSI and MACD line remain weak and bleak wanting another low in yield after a bounce occurs.

Yield should stabilize in this 2.95%-3.05% area and recover. The gap between the pink lines will likely be filled. Yield may need a week or three, say the next month, to stabilize and form universal positive divergence both in the multi-month and near-term time frames. The possie d will then create a more substantive recovery for yield going forward but do not get too excited. Treasury yields may remain flat for the next couple years disappointing those expecting inflation. 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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