TNX 10-Year Treasury Note Yield Daily Chart Sideways Channel Cup and Handle Pattern

After the surprise in the FOMC Minutes that many members want to see an end to the QE bond-buying yesterday, the ten-year Treasury yield exploded thru 1.90% and the dollar jumped higher.  Does this forecast the beginning of the large up in yields here forward?  Probably not.  Bernake, Yellen, Dudley and Evans run the show at the Fed and all are doves that will print as long as there are trees remaining. So the up in yields may be short-lived.

The daily chart shows the yield punching up thru the five-month sideways channel at 1.88%. The thin black line resistance is at 1.91% where the yield tested and pulled back slightly. The neon green lines show a cup and handle pattern which makes this breakout line at 1.90-ish all that much more important. The C&H, with base at 1.4 and breakout line at 1.9 would target 2.4% which is the March top.  The 2.10%-ish area has a gap large enough to drive a truck thru so that will definitely require filling in the future, the question is does it happen in Q1 2013, or Q1 2016?

The red lines show the negative divergence now in place which should create a spank down in the near term. However, the weekly chart is showing a sideways to sideways up bias for Q1 and perhaps Q2, so after the yield may pull back, further buoyancy may lie ahead early in the year.  With all the political and central banker follies, it is too difficult of a call to make currently. Clearly a base was established in the summer with the falling green wedge, oversold conditions and positive divergence that created the August rocket launch.

The 200-day MA continues to slope down which is bearish so watch to see if it flattens and turns up in the weeks ahead. ADX is showing a long and strong profile over the last few days, ditto the MACD line, so this hints at another run to take out yesterday's 1.91% in the very short term, after a mini pull back, so the line shown in the margin may be the potential direction. The importance of the 1.90%-ish level here cannot be understated. The current projection is for the sideways behavior to continue perhaps oscillating on each side of 1.90% until the politicians decide on the debt ceiling and funding the government in February. At this writing the yield is at 1.95% doing its best to establish a breakout, however, the Jobs Report data in about an hour or so will directly impact yield. 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 1/4/13 at 9:07 AM: The Jobs Report was in line, no great shakes, the 10-year yield is at 1.93%.