Monday, November 7, 2016

TNX 10-Year Treasury Note Yield Daily Chart; Uward-Sloping Channel; C&H; Ascending Triangle

Yields have been rising the last few months which as the inflation proponents proclaiming big increases in prices ahead. Many analysts consider a 2% yield on the table very soon. Over the last six or seven years, everytime analysts and traders become excited about rising rates they are smacked in the face.

Yields bottomed at 1.34% with the C&H (cup and handle) pattern in green. The top of the cup is 1.60% so the target is 1.86% (1.60% +0.26) which is where yield is now so the pattern is satisfied. The blue asending triangle pattern also played out with a vertical side of 15 basis points so the target was 1.75% (1.60 +0.1) which was quickly achieved in September on the breakout.

Yield is in an upward-sloping channel patter and was spanked back by the top rail a few days ago. The upper standard deviation band was also violated so yield came back to the middle band. The red lines show the neggie d that smacked yield lower. The pink box shows the ADX in a strong trend at 39 and the trend is currently up. So the expectation would be for another higher high in yields due to the joyous ongoing uptrend. This gels with the weekly chart that continues to show a long and strong MACD line wanting one more yield high in the weekly time frame.

Thus, yield may retreat in the days ahead but likely to hold that brown line of support at 1.73%-ish. Then back up to the 1.85%-1.93% range. Interestingly, yield will probably stall before achieving the 2% looking at the current weekly and monthly charts. There is likely a lot of sideways chop ahead for yields in the months perhaps year or two ahead. Yield may stay in that sideways blue channel of support and resistance at 1.66%-1.93% through th e end of hte year and well into next year. Although there is a bit more upside in yields likely, say, a couple weeks or so out, at that point yield will likely line out sideways. 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.

Note Added Thursday Morning, 11/10/16: What a difference a couple days makes. Donald Trump defeats Hillary Clinton and will become the 45th president of the United States. The yield curve steepens sharply with the 2-10 spread increasing from 90 bips to 113 bips. The steeper yield curve benefits the banks which rally sharply higher especially the regional's. The 10-year yield jumps above 2% yesterday to 2.09% now at 2.07%. Wow. Yield blew up through the upper blue channel line like it was not even there. The yield now corresponds to January levels. Charts need a little time to build in the surprising news about a Trump presidency ahead. The indicators on the TNX daily chart shoot higher so there will be buoyancy in the yield for a few days, however, the histogram remains negatively diverged and the stochastics are overbot. On the weekly chart, TNX filled a gap from January. There is another gap above at 2.24%-ish. The weekly chart indicators point higher so  there are a couple few weeks of higher highs in yields likely, however, the stochastics are overbot. The 200-week MA is 2.21%. Keystone's 80/20 rule is that 8's lead to 2's so the yield tagging 1.80% hints that 2.20% may be on tap. The breach above 2.08% hints that 2.12% is on tap. Things change quickly. The Trump factor is causing a repricing in all markets. So the 10-year yield should trade choppy with an upward bias say for a couple or four weeks and then top out. The 2.20%-2.30% range is in play and this may serve as the new top resistance rail that holds yields under for the following months. The 1.90%-ish level is support. Yield may favor the 1.90%-2.30% range into the new year. Another sharp spike higher would not be expected but a move to the 2.21%-2.24% area is on the table to fill the gap and test the key 200-wk moving average. Traders believe a Trump presidency is inflationary.

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