TNX 10-Year Treasury Note Yield Daily Chart Sideways Channels Falling Wedge Positive Divergence

The 10-year yield dropping is a signal of disinflationary and deflationary times ahead.  The blue lines show the horizontal nature of the yield over the last year, ever since the waterfall crash in equities last August.  The thickest lines bracket the entire range at 1.70-2.40%. The low of the range was hit in September 2011 and the highs in October 2011 and March of this year. A tighter range shown by the medium thickness blue lines is 1.80-2.30%. Note that this lower rail for the channel is tested this week as the yield prints in the mid to low 1.8%'s.  The tightest range that has carried price for the last year is between 1.90-2.10%.

Yield leaked lower and once the 1.90% gave way the flood gates opened for lower numbers. Over the next couple-few days watch to see if the 1.80% support holds, or not. The yield action over the last month now exhibits a red falling wedge which is bullish. An ideal place for a bounce would be now with the 1.8%-ish support holding. An upside target for the bounce would be the 1.9%-ish that may serve as a ceiling. The MACD histogram, stochastics and ROC are positively diverged and want to see a bounce in yield now. Note, however, that the RSI and MACD line both want to see a lower low in yield after the bounce occurs. Thus, the line in the margin shows the forecasted path of up to 1.9% then down to break under 1.8% to place a bottom in the 1.70-1.80% range representing the bottom rail of that all-encompassing one year lower channel rail in the days or couple weeks ahead.

When yields move lower, the bond or note price moves higher and visa versa.  Yields moving lower reflect a move of money out of riskier stocks into safer-haven Treasuries.  As money is pulled from equities, the stock market obviously drops, and as much of this money is placed into Treasuries, this causes Treasury price to rise as the demand increases. Higher prices result in lower yields. Yields lower = equities markets lower.  Yields higher = equity markets higher. 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.