TNX 10-Year Treasury Note Yield Daily Chart H&S Overbot Negative Divergence Setting Up

Drilling down further for the 10-year to the daily chart, the sideways range at 2.50%-2.90% for the last one-half year is clearly visible. The move out of this range dictates the winner moving forward. The red lines show the rising wedge, overbot conditions and negative divergence Keystone used to call the top in yields in early September. If you recall back then, traders were 100% convinced that yields can only go up but the neggie d spank down brought everyone back down to earth. In late October, the green falling wedge, oversold conditions and positive divergence created the launch from 2.48% to 2.80% now. Yield now prints a higher high as compared to 8 days ago but the RSI, histogram, stochastics and ADX positive line are all negatively diverged wanting to see yields drop. The MACD line is long and strong and the RSI likely will break higher, and it is not overbot as yet, so yields should remain buoyant even if they retreat for a day or three.

The pink standard deviation lines show yield tagging the upper boundary 8 days ago so a move back to the middle band, the 20-day MA at 2.64%, should occur, at a minimum, and a move to the lower band at 2.5%-ish is also on tap. Since the MACD and RSI may have a bit more upside juice, yield may want to tag the upper band again now at 2.83%. The horizontal resistance shown by the thin brown line is 2.85% so using a 2.83%-2.85% ceiling for yield in the near-term forward may be a prudent call. This will also allow time for the MACD and RSI to set up with neggie d.

The H&S pattern (dark maroon lines) shows the head at 3.00% and neckline at 2.50% for a target of 2.00% if the 2.50% fails. If yield moves above 3.00% in the days ahead, the H&S pattern would be negated. The ADX shows that the up in yields was a very strong trend from June into early October, but the strong upward trend in yields then died. The ADX is under 20 and no longer impressed with the up in yields forecasting more of a sideways move rather than up. What does all this mumbo jumbo mean? Projection is a move to the 2.83%-2.85% area in the coming days. The neggie d may create a small spank down in the coming days but yield should come back up again due to the long and strong MACD. Moving forward, for the days and weeks ahead, the anticipation is lower yields rather than higher with a move down towards 2.65% at a minimum. There is no trade right now since the chart is in no-mans land still yet but once price jogs for a couple-few days and comes up towards the top band in that 2.83%-2.85% area, a long TLT (perhaps at 100-102) or short TBT trade may have potential moving forward. 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.