UST10Y 10-Year US Treasury Yield Daily Chart; Textbook Inverted Head and Shoulders Pattern

Yields pop this week as markets become nervous about Japanese bond markets and with the King Donnie daily baby rhetoric the latest diatribe is Greenland. Diatribe Donnie will be speaking from Davos shortly where he is hob-nobbing with the billionaires that tell the millionaires how to live. Donnie loves to dine and play in the opulence while Americans cannot afford to pay their bills or buy food. Let them eat cake. The a-holes attending Davos will profess worry about climate change when their private jets are burning barrels of fuel at the airport proving that agenda is phony BS.

Anyhoo, the 10-year yield pops higher receiving an upward thrust from the inverted H&S. With neckline at 4.15% and head at 3.95%, that is 20 bips. If yield breaks out above the neck at 4.15% the upside target to satisfy the H&S is 4.35% and that is price resistance from August. Yield popped to 4.32% so it is almost there already. It may overshoot up to the 4.39%-ish level.

The orange lines for the chart indicators show the upward thrust but the blue lines show negative divergence developing and the stochastics are overbot. The yield has legs higher due to the Japan worries and on recent Fed and Donnie talk, and inflation and jobs data, however, the daily chart hints that the upside may not endure. Ditto for the weekly chart.

Thus, mathematicians say thus a lot, that is why we are never invited to the fun football game parties, yield may finish up its run to satisfy the 4.35% target and then drift lower again. The 200-day MA 4.24% is strong support. The weekly chart wants to see yield jog in this 4.25%-4.39% area for a couple-three weeks before likely topping out with negative divergence.

Thus, yield will likely remain elevated in this 4.30% to 4.39% area chopping along for the next month and then the sideways range will likely widen and the 10-year yield will spend much of its time the next few months stumbling sideways through the 4.15%-4.40% range, and bringing it in tighter, the 4.24%-4.40% range. It does not have the vibe that it will run to 4.5% and higher over the next few months but the political and Fed rhetoric, and new Fed chair pick that should come anytime, and Japan concerns, will dictate some of the movement.

Keystone is not playing in this arena. You can adopt the same technical analysis to the TBT ETF and also assess the standard H&S pattern on the TLT ETF. The TLT is the mirror image of TBT. When notes and bonds are shunned, and price drops, and yields run higher, as the 10-year yield chart shows above, the TBT is the winner and TLT the loser. When notes and bonds are bought, the price runs higher, and yields retreat, so TLT is the winner and TBT the loser. King Donnie has been quiet the last few days on Iran. After the Iranians were shot in the street, they got smart and stayed home, then the orange head jumped in and proclaimed that he stopped the shootings. It's funny. Donnie likes that Beach Boys tune, 'Bomb, Bomb, Bomb Iran'. Everybody sing. 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.