TNX 10-Year Treasury Note Yield Daily Chart H&S Patterns Descending Triangle

The 10-year yield was up at 2.65% yesterday. Today it falls under 2.60%, then loses the long-term support at 2.57%-2.58%, printing a low at 2.525%. Yield is now printing at levels not seen since Halloween over six months ago. The lower yield hints that the economy is in a lot sicker shape than people think. Perhaps the lack of top line sales with companies for over one year's time is finally creating trouble. The 2.58%-ish level is critical support as shown by all the successful tests since February but after pounding on the door several times, the yield finally breaks under. The 2.58% is now critical resistance.

The longer term purple H&S shows head at 3.02%, neck line at 2.48% so a target of 1.94% occurs if the 2.48% level is lost. Bringing the action in closer, the brown H&S with head at 3.02% and neck line at the 2.58% level targets 2.14% now that the 2.58% level failed. The pink descending triangle pattern is also in play and targets 2.14% now that the 2.58% base line failed. The green lines, however, are more bull friendly, at this time. If the weakness persists, the chart could grow very ugly very quickly. The MACD line and ROC are weak in the very near term but the multi-month period shows positive divergence looking for a bounce. Since the failure of the 2.58% only just occurred, yield likely wants to play around at these levels a few days. Note that lower horizontal support, from the yield cluster in October, and the lower rail of the downward-sloping channel intersect at the 2.48% level.

Projection is a move sideways through 2.48%-2.58% going forward where the winner is decided by whichever way yield exits this range. The 10-year yield is in big trouble if 2.48% fails. Note the juicy gap fill needed down at 2.35%. 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 6:37 AM on Friday, 5/16/14: The 10-year yield collapses to a LOD at 2.473% testing the critical 2.46%-2.48% support area, and bouncing. The drop through 2.50% has everyone's attention. Overnight, yield moved up to 2.52% again but now drops under 2.50% Friday morning. The low yields indicate that the economy is not doing as well as people think. Ask the middle class and poor and they could have told you that.