TNX 10-Year Treasury Note Yield Daily Chart; Double-Top (M Top); Overbot Yield; Negative Divergence; Tight Bands

The TNX weekly chart was posted the other day. Yields are in a topping process right now but the MACD on the weekly chart needs to go neggie d to lock-in a multi-week down move in yields (bond bullish). On the TNX daily chart above, the 10-year yield comes up to 1.16% so it is a matching high to the prior peak. The indicators are all negatively diverged although clearly in this very tight time frame there is some momentum. Markets are likely in idle mode waiting on the Monthly Jobs Report tomorrow morning at 8:30 AM EST only 21 hours away.

Yield may run a bit higher on the momo but the blue lines want to see it peak-out and roll over lower so yields would be expected to retreat at anytime likely in concert with stocks dropping (flight to safety, notes and bonds are bot so prices rise and yields drop). But if you bring up that TNX weekly chart you can see the MACD line still long and strong. You want to see that go neggie to identify the top in yield and the start of a multi-week decline in yield.

The double-top of M-top pattern is in play. A peak at 1.16% and base line at 1.00% is a 16 bip difference so the downside target would be 0.86% if the 1.00% fails and this area is key yield support/resistance from the end of last year. The purple arrows show the standard deviation bands coming in tight so a big move in yields in the daily time frame is coming. Tight bands, however, do not tell you direction, only that the move will be large. Will it keep breaking out higher which means it will spurt strongly higher, or, will yield receive that blue neggie d spankdown and retreat to test the critical 1.00% support?

Marry the daily and weekly and two scenarios present themselves currently. First, yields begin lower right now in the daily time frame and the MACD on the weekly chart goes flat quickly so the top is in for yields and the multi-week drop begins. Second, yields begin lower right now in the daily time frame but must come up again to another matching high yield to satisfy the MACD on the weekly chart. This will occur a few days or week or so out after yields drop for a few days and then rise again. When yield comes back up, as shown by the orange line, the weekly chart should be neggie d with the MACD and the top will be in on the multi-week basis and yields then begin lower for multiple weeks. This is the current thinking so yield will top out in say, a week or two if it does not collapse out of the blue with a stock market event.

You must watch the RSI oni the TNX weekly chart. This was highlighted previously. If the weekly chart keeps trying to push yield higher and the RSI squeezes out a higher higher, that will extend the top in yield by another week or so. This is not expected but the charts will tell you the story  in a few days.

In a nutshell, yield should begin lower and trade soft for a few days, but then recover and come back up for a matching higher again, then die, beginning a multi-week move lower likely in conjunction with a weak stock market that trails lower for several weeks. The banks have rallied for big gains this year as the yield curve steepened but will likely pullback as yields become soggy. 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.