TNX 10-Year Treasury Note Yield Weekly and Daily Charts Inverted Head and Shoulders Sideways Symmetrical Triangle Bull Flags Potential Island Reversal

The 10-year yield made a big jump over the last day or so from 1.81% to 1.89% this morning. So price is near the 19 (1.90%) on the daily chart. There is a purple inverted H&S pattern in play now with head at 1.40% and neck line at 1.85%. This pattern targets 2.30%. Price punched up thru the neckline in January and then comes back down to back kiss the neck line in recent days. This morning is showing a bounce higher again off the neck line. The weekly chart blue lines show an even larger inverted H&S with head at 1.40% and neck line at 2.30% which would target 3.20% but this pattern is not in play unless yield popped up thru 2.30%

The brown sideways symmetrical triangle is also of interest with price breaking up and out the top rail in December, coming back for a back kiss, then heading higher. The vertical side of the triangle is 500 basis points so the target would be 2.20% considering the breakout from 1.65-1.70%. Note how starting with last April with the gap down, an island is formed from 2.05% and lower and we have been floating on this island for ten months. When the time comes for yields to move higher the yield will either move up to 2.05% and gap directly up to 2.20% to create an island reversal, or simply move up to fill the gap. The two bull flag patterns over the last two months are show the first bull flag already played out and currently yield is deciding if it wants to morph into a larger bull flag which would target the 2.20%.

The daily chart is negative, however, the indicators want to see further weakness (red lines) but the equity markets, and the yields, continue higher. The top in January was clearly created by the negative divergence. The weekly chart is more optimistic showing negative divergence on the histogram and ROC that helped create the pullback over the last three weeks, however, the RSI and stochastics are long and strong wanting to see higher highs for yields. The overbot levels are not achieved further hinting of more upside for yields. Considering the sideways triangle and the indicators that are showing a preference to meander sideways, may lead to more sideways movement in yields. The yield is currently deciding if it wants to start moving thru the 1.85%-2.30% zone for the weeks and months ahead. Traders appear to be willing to jump the gun and move that way as evidenced by yesterdays move of money out of bonds and into stocks.

Sometimes charts do not provide a clear picture and more time is needed to gain more information. This is one of those times. The projection would be sideways with a sideways up bias based on the weekly chart. However, the daily chart says yields should come back down even if an up move occurs today. For now, a move thru 1.70-2.0% should continue and perhaps next week will provide more clues.  Obviously, yields will be moving up, and up substantially, the only question is does it happen today, next week, next month, next year, or a couple or three years from now. Keystone continues to look for the disinflationary and deflationary story to play out for perhaps a couple more years and the coming weeks will certainly tell if that is the case, or not. The yield just printed 1.90%. 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.